Paraguay merits Washington’s elevated attention as the country just inaugurated a new president interested in promoting economic freedom, combating corruption, and building alliances with democratic nations. Paraguay is an important U.S. ally in a South America where many nations are turning away from the U.S. toward China and toward increasingly socialist governance.

Santiago Peña, the former finance minister who sailed to clear victory in Paraguay’s April election by a significant margin, was sworn in on Tuesday as the country’s new president.

In his inaugural speech, Peña, a conservative, business-friendly technocrat (who visited The Heritage Foundation when he was finance minister), underscored the importance of “firm and ethical leadership” and highlighted his policy direction to “build alliances” with the U.S. and other democratic nations for the next five years of his presidency. (The Daily Signal is Heritage’s news and commentary outlet.)

Pledging his pursuit of economic freedom-enhancing policies for the landlocked nation, the new president put an unambiguous emphasis on his intention to combat state corruption, attract greater foreign investment, and improve the overall quality of life for Paraguayan families.

While it may be still premature to gauge exactly how Paraguay’s economy will ensure its ongoing transformation, the country has been on an encouraging development trajectory supported by stable and resilient macroeconomic conditions. Paraguay’s level of public debt is among the lowest in the region, and the country has also made strides in battling corruption and inefficiency in the public sector. Paraguay continues to move forward, with economic growth for 2023 expected at 4.5%, according to the International Monetary Fund.

The sustained push for economic liberalization and greater transparency in government has markedly improved Paraguay’s competitive edge. According to The Heritage Foundation’s 2023 Index of Economic Freedom, the annual global benchmark report that compares countries’ economic governance and competitiveness, Paraguay’s economy is rated as “moderately free,” with its global ranking of No. 76 placing the country ahead of neighboring Argentina, Bolivia, and Brazil.? ?

It is also notable that Paraguay has already shown itself to be a good partner for the United States in hemispheric relations. It has worked closely with Washington in counter-narcotics initiatives as well as cooperating to reduce other illicit cross-border activities.

On the international stage, Paraguay under the Peña administration is likely to play a larger and more constructive role in forging greater partnerships with Israel and Taiwan, two important allies of the United States. This will unambiguously make Paraguay stand out as a partner that Washington should cultivate a closer and greater strategic relationship with.

So, early signs from Peña are undoubtedly promising.

Israeli Prime Minister Benjamin Netanyahu congratulated Peña on his election victory, and the two leaders reaffirmed their commitment to strengthening bilateral ties. Foreign Minister Eli Cohen, representing Israel at the Aug. 15 inauguration ceremony, also had forward-looking conversations with Peña, who accepted the invitation to visit Israel within the year and pledged to reopen Paraguay’s embassy in Jerusalem.

Regarding Taiwan, Peña highlighted during his inaugural address that Paraguay and Taiwan are “not just allies, but also brothers.” Taiwan’s vice president, William Lai, attended the inauguration. Lai is also the ruling Democratic Progressive Party’s presidential candidate for the January 2024 elections.

Paraguay is the only country in South America and one of just 12 countries around the world to have diplomatic relations with Taiwan, which lost an ally earlier this year when Honduras cut diplomatic ties with the island nation.  

Underscoring that Paraguay under his presidency “will build alliances and cooperation with a geostrategic vision, seeking horizontal agreements,” Peña further noted that his country’s relationship with Taiwan “is an example of this and of Paraguay’s friendly and cooperative spirit with nations for which [Paraguay has] deep affection.”

Washington should welcome the constructive and forward-looking interaction between America’s two critical partners, one in the Indo-Pacific and the other in South America. A greater Paraguay-Taiwan relationship matters to America in holding back China.

China has been seeking trade, diplomatic, and military ties in Latin America and the Caribbean for years. The region is rich in natural resources and has developing markets for Chinese-manufactured goods.

The United States can and must win the geopolitical diplomatic competition. There is still time for America to counter China’s malign and manipulative influence with other nations, but that window is quickly closing. Washington cannot win the battle of ideas and diplomacy without being proactive on this critical front.

To that end, Washington should pay closer attention to the ongoing interaction and the broad relationship between Paraguay and Taiwan while proactively paving a deeper and wider path of a pragmatic, strategic partnership amongst the three nations. 

All in all, Paraguay is becoming one of the most reliable partners of the United States. It’s in the clear interest of Congress to welcome Paraguay’s new president, Santiago Peña, and work closely with him on a range of vital issues that advance freedom, opportunities, and prosperity for both nations.

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