Recently, a host of individuals and organisations throughout Latin America called attention to the tumultuous state of politics in Paraguay, where democratically elected President Fernando Lugo was impeached by the country's Congress under somewhat dubious circumstances. In a letter of protest, the signatories sketched out a rather inflammatory theory. They claim, for example, that the US Southern Command wanted Lugo gone as the Paraguayan leader who had opposed US militarisation in his country.

"We already know who overthrew Fernando Lugo and why," they added. "El Chaco … cannot be allowed to belong to [Paraguay]… nor its people; [the region has] been bound for occupation and extraction by multinationals through megaprojects and terror financed with public resources. The coup in Paraguay, like similar ones throughout Latin America, was carried out by and for multinationals and their partners among the local elites."

"El Chaco" refers to a vast, arid and inhospitable swathe of territory made up of lowland forests and savannas. The territory spans much of Paraguay, Bolivia and northern Argentina, and contains abundant natural resources. As a result, the Chaco has been much fought over and coveted by nations in the vicinity as well as foreign multinational companies. From 1932-1935, Bolivia and Paraguay fought what came to be known as the Chaco War. At the time, the Chaco was thought to contain lucrative hydrocarbon deposits and each country hoped to cash in on the coming bonanza.

A history of intrigue

Paraguay's ousted president seeks return to office

Though Bolivia seemed to enjoy great advantages over Paraguay, its troops displayed low morale and died in large numbers from disease and snakebite. By the time the pointless and wasteful conflict was over, 100,000 men had lost their lives. Paraguay controlled most of the disputed territory at the conclusion of the war, and under a truce it gained access to most of the land, though in a small consolation prize, Bolivia was granted access to the Paraguay River. The Chaco War proved psychologically shattering for Bolivia, particularly amongst younger literate officers who charged that international oil companies had manipulated the nation into the conflict in the first place.

Before the conflict, Standard Oil, a US-based company, had discovered petroleum in eastern Bolivia and believed that more oil could be found in the Paraguayan Chaco. Unfortunately, its British competitor, Shell Oil, had exploration rights in the region. During the war, both companies were at odds, with Standard supporting Bolivia and Shell backing Paraguay. US diplomat, businessman and lobbyist Spruille Braden was thought to have played a particularly nefarious role during the Chaco War and reportedly worked as an agent for Standard Oil.

To this day, the Chaco War intrigue continues to fuel suspicions among regional leaders. Recently, Argentine President Cristina Fernández de Kirchner remarked that the conflict had the "smell of petroleum" and claimed that Braden had played an underhanded role in spurring the war. What is more, during a 2009 ceremony remembering the Chaco War, Bolivian President Evo Morales declared that the conflict "was an unjust war for oil" in the "interests of empires like the US and England". Former Paraguayan President Lugo added "the sovereignty of our people will not be threatened by foreign interests or multinational forces that confronted us in the past".

So much for previous diplomatic shenanigans, but is there any evidence that the US plays an underhanded role in the Chaco today? And what of Lugo's removal from power in Paraguay - was control over the Chaco related in any way to the recent political crisis? The public should be cautious about embracing overarching conspiracy theories without marshalling sufficient proof, and I am just as sceptical as anyone.

However, in light of private US diplomatic correspondence released by whistle-blowing outfit WikiLeaks, as well as ordinary press reports, it seems pretty safe to say that Washington has been obsessed with the Chaco. Furthermore, in light of many odd and bizarre recent developments which are difficult to explain away as mere "coincidence", it seems reasonable to surmise that Lugo's impeachment was tied in certain respects to Chaco intrigue.

What's behind the US Presence in the Chaco?

The prospect of Paraguay and Bolivia burying the hatchet over the Chaco and allying on politically leftist lines was hardly an agreeable prospect for Washington. As I've detailed elsewhere, both former Secretary of State Condoleezza Rice and current Secretary of State Hillary Clinton viewed the Paraguayan left with suspicion. What seems to have scared them the most was the notion that Fernando Lugo might cultivate ties to nations such as Venezuela, which was allied with Evo Morales in Bolivia.

If it ever came to fruition, such an alliance could cast a dark cloud over sensitive US military operations. For years, US forces operated in Paraguay under the Southern Command to ostensibly provide rural medical care. However, some have suggested that the Americans were actually in Paraguay to spy on leftist movements or peasant leaders. Whatever the case, it seems that US troops were deployed to the remote Chaco region during their training missions.

Indeed, according to Argentine paper Clarín [Sp], US technicians constructed an air base in the Paraguayan Chaco town of Mariscal Estigarribia. In 2005, a correspondent from the paper visited the facility, describing the base as "an enormous aircraft carrier in the middle of the desert". Moreover, the air strip was very wide and could accommodate B-52 bombers, even though the Paraguayan air force didn't have any such planes in its arsenal.

In 2006, still two years prior to Lugo's assumption of power, diplomats reported that US forces were operating in the Chaco to "survey possible locations for future humanitarian assistance exercises". In truth, however, the State Department itself seems to have had little idea of what the Pentagon was actually up to in Paraguay (indeed, according to the Washington Office on Latin America, two members of a US Special Forces team operating undercover were involved in a deadly firefight in 2004. Tragically, the shootout resulted in the death of a Paraguayan who was attempting to rob the soldiers. Apparently, the Pentagon had kept the team's existence a total secret from the US embassy in Asunción).

Bolivia and US manoeuvre for influence

Fearing encirclement, Venezuela and Bolivia struck back and announced "a deal to build a new military base along the disputed Chaco border region (at Puerto Quijarro)". Later, the Paraguayan president confronted Evo Morales at the United Nations to request an explanation.

Apparently miffed at Asunción, Morales was in no mood to back down, and later sent Bolivian military officers across the border into the Paraguayan Chaco to spy on and inquire about US military operations. The incident worried not only the US embassy in Asunción, but also right-wing officers in Paraguay.

Meanwhile, conservative senators told the US ambassador that Venezuela and Bolivia were intent on "pushing us around". Specifically, the Paraguayan military was "very concerned about Bolivia rearming and planning to develop several new military facilities with the assistance of Venezuela". The officer corps, which was still smarting over the "anguish" of the Chaco dispute, wanted new weapons and technology from the US to "offset this threat".

The US embassy was happy to oblige, noting that "Post will continue to press for continued military co-operation". Despite such assurances, however, the Paraguayan military continued to worry about "lingering irredentist claims within some segments of the Bolivian military to territory in the Chaco". In an echo of the Chaco War, diplomats explained that "discoveries of potential commercially significant natural gas resources near the Bolivian border could add fuel to such concerns".

Just days before the Paraguayan election of 2008, the right-wing Colorado Party grew concerned that Lugo might win. One Colorado Party senator told US diplomats that Washington was "failing" in its approach to Latin America and should "work with the Paraguayan military to build a military base in the Chaco to fight the growing narcotics trade (and to ward off any ideas from Brazil or Bolivia about infringing upon Paraguayan sovereignty)".

The Morales regime in La Paz sounded the alarm bell in turn, accusing the US of wanting to establish a military base in the Chaco "for the purpose of monitoring activities in Bolivia or attempting to control energy resources in the Bolivian and Paraguayan Chaco region". Concerned about growing encirclement, the Bolivian minister of defence travelled to Paraguay and asked the Asunción government "to slow down its mil-mil relationship with the United States". The Colorado Party and "many like-minded military officials", however, rebuffed Bolivia and sent the minister packing.

Paraguay and Bolivia bury the hatchet

Paraguay's Lugo condemns 'parliamentary coup'

Since we don't have any access to Pentagon documentation, let alone other US intelligence agencies, it's unclear what concrete moves the defence establishment there took in relation to the Chaco. However, judging from the WikiLeaks cables, US officials were amenable to Paraguay, with one diplomat remarking that the Colorado Party's pleas for assistance were understandable. "Hopefully, with Paraguay's next president, we can do more," the embassy in Asunción wrote.

Lugo's election, however, threw a wrench into US regional geostrategy. Though Paraguay's new president was no radical, he staked out an increasingly independent foreign policy and began to limit the Pentagon's role in his country. Even more worryingly, Lugo quickly indicated his desire to bury the hatchet with Bolivia and flew to La Paz to meet with Morales personally. In a rhetorical flourish, Lugo remarked that "the age of imperialism is over in this new age in Latin America" and that the future of Latin American relations with the United States would be "based on respect, equity, and justice".

If that were not enough to cause offence among the powers that be, Lugo also conducted a symbolic meeting with Morales in the rural Paraguayan Chaco town of Mariscal Estigarribia to commemorate the 74th anniversary of the end of the Chaco War. Both leaders signed a joint peace declaration and delivered speeches, with Lugo pronouncing that both South American nations had "learned that the integration of their peoples is more important than the legacy left by the blood of Bolivians and Paraguayans spilled on Chaco's oil".

Morales apparently hoped that such ideological affinities would lead Lugo to curtail Paraguayan-US military links. When Bolivia asked Paraguay to come clean about alleged US bases on its territory, Lugo denied their existence but later declared that he would open an investigation. Needless to say, however, such pronouncements did not go over very well with the Paraguayan nationalist right in congress, which was unhappy about any rapprochement with Bolivia.

Postscript: Lugo's ouster and the Argentine Chaco

To be sure, there's no "smoking gun" proving that the US played a role in Lugo's recent ousting, but some reports are incredibly suspicious in terms of the time line. Indeed, just coincidentally, a right-wing Colorado deputy who presided over the Congressional Committee on Defence met with US military personnel shortly after Lugo's impeachment. According to Mexican paper La Jornada [Sp], he and his colleagues spoke with the US about the construction of a military base in Chaco. The legislator remarked that a Chaco base was "necessary" because Bolivia constituted "a menace for Paraguay".

As if this report were not enough to raise eyebrows, the US has also been engaging in a high-stakes effort to secure a military base in the Argentine Chaco, just across the border from Paraguay. As in Paraguay, the Pentagon claimed the base was necessary in order to provide local humanitarian relief. US diplomats, meanwhile, got the backing of a pro-US provincial governor for the project. However, in a huge setback for the US Southern Command, the Argentine government decided to scotch the initiative following an outcry from civil society.

In light of the evidence, it's pretty clear that Washington wants to get a foothold in the Chaco. Perhaps the more interesting question, however, is why? Perhaps the US wants to monitor drug trafficking in the Chaco, or alternatively desires control over strategic resources. Maybe Washington seeks to prevent Paraguay from entering into a leftist alliance with Bolivia, or it wishes to encircle rising star Brazil. Or perhaps it's merely some combination of all these things. Whatever the case, however, it surely involves skulduggery.

Nikolas Kozloff is the author of Revolution! South America and the Rise of the New Left.

Follow him on Twitter: @NikolasKozloff