Another year, another rightwing coup against a pro-poor government in Latin America, this time in Paraguay. The 2009 coup in Honduras that removed President Manuel Zelaya from power may have set back reforms in the country for a generation, and human rights abuses continue to be widely reported.

The same reversal of progress may be the fate awaiting Paraguay if neighbours Brazil and Argentina, along with other countries in the region, fail in their bid to reinstate Fernando Lugo to the presidency. Lugo was impeached last week in a move he calls a "parliamentary coup".

There may be differences in form, but the story is essentially the same – progressive but imperfect leftwing leader ousted by rightwing forces determined to halt policies that threaten their business interests. Although it will be presented as an issue of politics, and therefore reported on the foreign affairs pages, it is a fundamental issue of development and human rights.

"Today it is not Lugo who is the subject of a coup," Lugo said as his rightwing successor prepared to take the oath of office, "not Lugo who is removed from power: it is Paraguayan history and its democracy that have been deeply hurt … I hope the people who did so are conscious of the seriousness of their acts."

According to the Paraguayan human rights activist Martín Almada, the murder of 17 farmers, which was seized upon by the Colorado party as a pretext for the impeachment, happened "as a result of a process of police violence instigated by big landowners discontented with President Lugo".

Lugo was elected in 2008 to govern a country where inequality is entrenched. A UN report that year said: "The scale of social exclusion reflected in high levels of poverty, inequality and discrimination in terms of ethnicity, gender, and language continue to undermine democratic citizenship and participation." According to government figures, 38% of Paraguayans live in poverty, rising to 49% in rural areas, while 19% live in extreme poverty – figures that have, if anything, worsened since the mid-1990s.

There is insufficient data to confirm whether Lugo had succeeded in redressing these injustices, but the trend seemed to be positive. According to the poverty eradication group Social Watch, a conditional cash transfer and family support programme has resulted in an increase in the number of families receiving help – including new beneficiaries such as pensioners and people with disabilities – from 14,000 in 2008 to 112,000 by 2010.

In 2010, the Lugo government started a social protection system designed to alleviate extreme poverty still further with public policies mainly aimed at the poorest areas. The building of more than 500 family health units means 1.5 million more people are now covered by health services.

What really upset the applecart was Lugo's stance on land reform. In Paraguay, 2% of the population control more than 75% of the fertile land, while small-scale farmers – about 40% of the population – own a mere 5%. One-third of the rural population is landless. Despite attempts to shift away from an agricultural and natural resource-based economy, the land remains the key to wealth and power in Paraguay, just as it has for hundreds of years.

When Lugo attempted to take on these powerful interests, violence erupted. His reversal of a direction towards the privatisation of key utilities, namely electricity production, further alienated him from the right. Instead, with Mercedes Canese, the deputy minister for energy and a scion of the social movements, he was building a proposal based on the concept of energy sovereignty integrated with other Latin countries.

With no land reform, the best-case scenario for Paraguay's poor is gradual improvement in their living standards through investment in small-scale farming and better provision of basic services, following in the path of Brazil – where former president Luiz Inácio Lula da Silva chose not to confront landowners. The worst-case scenario is a return to human rights abuses and the end of meaningful democracy for a generation. Lugo was the first president since 1946 not from the rightwing Colorado party, and only the fourth president voted for by this generation of Paraguayans.

This coup is a tragedy, and development workers the world over should unite to demand action. As Lugo said: "I call on people from the countryside, the youth and all citizens to resist until we are back in the office we unfairly had to leave.''

• Cristiano Morsolin is an Italian journalist who has lived in Latin America since 2001