Diplo­mat­ic rela­tions in Latin Amer­i­ca were rocked by the ouster of Paraguay’s Pres­i­dent Fer­nan­do Lugo on June 22, after a hasty and con­tro­ver­sial impeach­ment tri­al by the nation’s Congress.

‘There was no love lost between Lugo and the State Department. They’re willing to accept the undermining of democratic processes as long as it’s a benefit to U.S. interests.’

Gov­ern­ments through­out the region denounced the pro­ceed­ings as an ​“insti­tu­tion­al coup,” and moved to sev­er ties with their soy-export­ing, deeply impov­er­ished neigh­bor. Mean­while, in the cap­i­tal of Asun­ción, schools shut down, shops closed their doors, and crowds of angry demon­stra­tors took to the streets to protest the top­pling of the first freely elect­ed pres­i­dent in the country’s history.

Lugo is the third demo­c­ra­t­i­cal­ly-elect­ed Latin Amer­i­can leader to be tar­get­ed for régime change in the last three years. A police-led upris­ing against the pres­i­dent of Ecuador was suc­cess­ful­ly put down in Sep­tem­ber 2010. A year ear­li­er, in June 2009, Hon­duran Pres­i­dent Manuel Zelaya was kid­napped by sol­diers and flown out of the coun­try. As in Paraguay, the Hon­duran Con­gress was used to legit­imize a pup­pet gov­ern­ment.

A mod­er­ate left­ist and a for­mer Catholic priest, Lugo had been dragged before Con­gress on vague charges of ​“poor per­for­mance.” Giv­en 24 hours to pre­pare a defense, he had just two hours to present his case before the oppo­si­tion-con­trolled Sen­ate. The ver­dict was deliv­ered almost with­out debate, and the man known as ​“the Bish­op of the Poor” was told to clean out his office — replaced by Vice Pres­i­dent Fed­eri­co Fran­co, a mem­ber of the far-Right opposition.

In their defense, the con­gres­sion­al archi­tects of Lugo’s down­fall cit­ed Arti­cle 225 of the Paraguayan Con­sti­tu­tion, which lays out an impeach­ment process. But crit­ics point to the lack of time Lugo was giv­en to defend him­self, as well as the light­ning-swift ver­dict, as evi­dence that due process had been violated.

​“The Paraguayan Con­gress is one of the most cor­rupt in the hemi­sphere,” says Mark Weis­brot, direc­tor of the D.C.-based Cen­ter for Eco­nom­ic and Pol­i­cy Research. Weis­brot calls the president’s swift removal ​“a coup by the leg­is­la­tors and the peo­ple who own them.”

After more than 60 years of rule by the right-wing Col­orado Par­ty — includ­ing three decades of bru­tal dic­ta­tor­ship — Paraguayans cel­e­brat­ed when Lugo came to pow­er in 2008, promis­ing tax and land reforms, and to com­bat pover­ty. He made mod­est head­way at first, invest­ing in low-income hous­ing and basic med­ical care for poor fam­i­lies. (Forty per­cent of Paraguay’s pop­u­la­tion is impov­er­ished; 11 per­cent is extreme­ly poor.) But Lugo’s admin­is­tra­tion soon ran afoul of elites who saw his anti-pover­ty ini­tia­tives as an exis­ten­tial threat to their grip on power.

​“They were afraid of the polit­i­cal space [Lugo] was open­ing up for reform,” Weis­brot says, cit­ing a U.S. State Depart­ment cable released by Wik­ileaks that revealed that a ​“most­ly legal” pres­i­den­tial coup had been in the works for at least three years. ​“They’ve been try­ing to get rid of [Lugo] since he was elected.”

Free­dom or feudalism

Lugo’s polit­i­cal ene­mies saw their chance to move against him on June 15, when a clash between police and dis­placed farm­ers near the east­ern town of Curuguaty result­ed in the deaths of 11 farm­ers and six offi­cers. Anoth­er 80 peas­ants, includ­ing chil­dren, were wound­ed. The skir­mish occurred when police moved in to evict farm­ers occu­py­ing land they say was stolen from them under the despot­ic rule of Alfre­do Stroess­ner, the Col­orado Par­ty mem­ber who ran the coun­try from 1954 to 1989.

Despite the fact that Lugo had ordered the police to evict the peas­ants, the priest-turned-pres­i­dent was accused by a Col­orado-led coali­tion in Con­gress of ​“encour­ag­ing” ille­gal land grabs and was suc­cess­ful­ly impeached eight days later.

​“The land reform issue played a great role in the coup,” says Mar­tin Alma­da, a Paraguayan lawyer and renowned human rights activist who has worked with Amnesty Inter­na­tion­al and UNESCO. ​“Under Lugo, for the first time, the campesino [small farmer] groups had a legit­i­mate voice in gov­ern­ment,” says Alma­da. ​“Now our democ­ra­cy has been kidnapped.”

Bloody land dis­putes, dri­ven by com­pe­ti­tion between large landown­ers and small-scale sub­sis­tence farm­ers, are noth­ing new in Paraguay. The land-locked nation is the world’s fourth-lead­ing exporter of soy — much of it goes to bio­fu­els for Europe and Asia— and the cash crop earns annu­al rev­enues of about $1.6 billion.

But ever-expand­ing soy pro­duc­tion leaves lit­tle room for the country’s pop­u­la­tion of 250,000 campesinos, who have seen their ances­tral lands swal­lowed up by influ­en­tial plan­ta­tion own­ers like Blas Riquelme, the for­mer Col­orado par­ty sen­a­tor (and out­spo­ken oppo­nent of Lugo) who was gift­ed the dis­put­ed land near Curuguaty under Stroessner’s rule. Just 2 per­cent of the land­hold­ers in this rur­al nation own about 77 per­cent of the arable land.

Mean­while, almost two-thirds of the country’s farm­land has been con­vert­ed to soy pro­duc­tion, and the process con­tin­ues. As a result, 9,000 small-scale farm­ers lose their land each year. Lugo had promised to change all that.

​“The campesinos just want to feed them­selves. They desire the dig­ni­ty that comes with work­ing the land,” says Alma­da. ​“Instead we’re forc­ing an entire gen­er­a­tion into the [urban] slums, or to work for slave wages on some­one else’s prop­er­ty,” he says. ​“That’s not free­dom — it’s feudalism.”

The fall­out from the par­lia­men­tary putsch in Paraguay was fast and far-rang­ing. Brazil, Argenti­na, Venezuela and many oth­er Latin Amer­i­can coun­tries prompt­ly refused to rec­og­nize the Fran­co régime and called home their ambas­sadors. The Inter-Amer­i­can Com­mis­sion on Human Rights con­demned Lugo’s removal as ​“unac­cept­able” and ​“like­ly to affect the rule of law.” Region­al trade blocs sus­pend­ed Paraguay’s mem­ber­ship on charges of a ​“breach of democracy.”

Mean­while, Lugo has appealed to the Supreme Court of Paraguay, whose deci­sion is pend­ing. The clock is tick­ing: Pres­i­dents are lim­it­ed to a sin­gle term, and Lugo’s is up in August 2013.

Gov­ern­ments across South Amer­i­ca and the Euro­pean Union, and even the U.S. State Depart­ment, have point­ed to the upcom­ing April 2013 elec­tions as a means of nor­mal­iz­ing rela­tions with Paraguay. But there are also wor­ries that the abrupt and dis­put­ed removal of Lugo might taint vot­er turnout.

​“After see­ing that their demo­c­ra­t­i­cal­ly and fair­ly elect­ed pres­i­dent can just be thrown out of office like that — with no due process, no voice of the peo­ple — ordi­nary Paraguayans feel dis­em­pow­ered,” says There­sa Cam­er­ane­si, who sits on the gov­ern­ing Coun­cil of School of the Amer­i­c­as Watch (SOAW), a group devot­ed to mon­i­tor­ing U.S. involve­ment in the region.

Game of pawns

The U.S. State Depart­ment, in stark con­trast to most of the rest of the hemi­sphere, refused to con­demn the over­throw of Lugo. This drew fire from crit­ics, who argue the Oba­ma admin­is­tra­tion could have done more to pro­tect demo­c­ra­t­ic process­es, or even demand­ed Lugo’s restora­tion. In the last four years Paraguay has received more than $121 mil­lion from the Unit­ed States in mil­i­tary and human­i­tar­i­an aid.

​“There was no love lost between Lugo and the State Depart­ment,” says Cam­er­ane­si, explain­ing that the afore­men­tioned Wik­ileaks doc­u­ments also indi­cate that the State Depart­ment was, at best, ambiva­lent about Lugo. ​“They’re will­ing to accept the under­min­ing of demo­c­ra­t­ic process­es,” Cam­er­ane­si says, ​“as long as it’s a ben­e­fit to U.S. interests.”

U.S.-based mega­cor­po­ra­tions like Mon­san­to and Cargill are heav­i­ly invest­ed in the Paraguayan soy crop, and in some cas­es have part­nered with the landown­ing elite who oust­ed Lugo.

Cam­er­ane­si, a reg­u­lar leader of SOAW del­e­ga­tions to Paraguay, calls the far-right Fran­co régime a ​“more will­ing part­ner” for U.S. busi­ness con­cerns. (Cargill, Mon­san­to and the U.S. State Depart­ment all declined to be inter­viewed for this article.)

How­ev­er, Weis­brot says the State Department’s will­ing­ness to look the oth­er way on Paraguay’s régime change isn’t due sole­ly to the nation’s vast soy fields. Lugo’s left­ist lean­ings made him a nat­ur­al ally to new pow­ers in South Amer­i­ca such as Brazil and Venezuela, which the State Depart­ment sees as eco­nom­ic and strate­gic threats. The Fran­co régime, by con­trast, has already shown will­ing­ness to sev­er rela­tions with U.S. arch-rival Venezuela.

​“That is how [the State Depart­ment] sees the chess­board: Any lit­tle piece you can get,” Weis­brot says. ​“At the end of the day, it’s all about who has con­trol in Latin America.”