Brazil & Southern Cone - February 2014 (ISSN 1741-4431)

Paraguay’s President Horacio Cartes has received his first major political setback in congress since taking office in August 2013. Earlier this month congress voted to repeal a law establishing the Seguro Obligatorio de Accidentes de Tránsito (Soat) compulsory motor vehicle insurance, which the Cartes government had supported. It is now up to President Cartes to uphold or veto the move by congress.

The previous interim government led by former president, Federico Franco (2012-2013) had first proposed the Soat in May 2013. The initiative calls for all motor vehicle drivers to pay a yearly insurance premium, the proceeds of which would go towards covering all the medical costs of personal injuries resulting from road accidents. With the full support of the ruling Asociación Nacional Republicana (ANR-PC) majority benches, as well as many members of the opposition, congress swiftly approved the framework bill the same month, with the details of its implementation to be thrashed out by the central bank (BCP)’s insurance superintendence (SIS).

The approval of the framework bill however prompted some protests from vehicle owners, who complained that it was nothing more than a government attempt to introduce a ‘covert tax’ to boost its coffers at taxpayers’ expense. The government rejected this, maintaining that the real motivation behind the initiative was to reduce the high number of road accident fatalities in the country, particularly in cases involving motorcycles.

In recent years motorcycles have become very popular in Paraguay due to cheap Chinese-made models that are assembled locally. As a result the number of motorcycles in circulation has soared but this has been accompanied by a significant increase in fatal traffic accidents. On health ministry figures, over the past two years, an average of 1,200 fatal traffic accidents have taken place each year, some 700 of which involve motorcycles. Health ministry officials also highlight that local public health services are currently overstretched and unable to cope with the extra cases.

After securing the approval of the framework law, the government announced plans to fully implement the Soat by January 2014, while the SIS promised to present full details of the plan before the end of January 2014. Accordingly the SIS presented the details on 10 January but these met with criticism from both legislators and sector regulators alike. Legislators complained that it was “unfair” and “unconstitutional” that drivers who already have their own insurance policies, should also pay the Soat. The BCP’s own directorate also said it was unacceptable to demand that drivers pay the Soat immediately even though full coverage would only be made available six months later.

Various municipal governments led by the mayor of Asunción, Arnaldo Samaniego (ANR-PC) went further and lodged a legal challenge against the initiative, arguing that it violated municipalities’ constitutionally-sanctioned capacity to determine road regulations in their own jurisdictions. In particular, the municipal governments objected to a provision which stipulates payment of the Soat as a prerequisite for renewing driving and vehicle licenses, one of the main municipalities’ main sources of tax revenue.

Reversal

The growing objections to the SIS’s Soat implementation plan prompted the congressional permanent commission (in session during the congressional recess period) to call on the BCP’s directorate to suspend implementation of the measure until March and the BCP directorate obliged on 12 February. At the time its head, Carlos Fernández Valdovinos, declared the SIS scheme full of flaws, which made it “unworkable”.

The president of the congressional permanent commission, Arnoldo Wiens (ANR-PC), then called for an extraordinary senate session to review the Soat framework law. In the 4 February session, the senate unanimously voted in favour of a motion to repeal the Soat law presented by ANR-PC Senator Víctor Bogado. While clear that such legislation is necessary in order to provide the public health sector with sufficient funds to address the increasing number of road accident injuries, Bogado said that this should have been addressed through “an alternative bill”. Following the senate vote, Wiens called for the lower chamber to hold an extraordinary session on 12 February to vote on the Soat law.

As in the senate, this yielded a unanimous vote in favour of repealing the law, sending it to Cartes who must now decided whether he will exercise his presidential veto for the first time or not.

A warning for Cartes?

Given that the political class largely agrees with the principle of the Soat initiative despite the public outcry, it is highly unlikely that Cartes will opt to exercise his veto. A more sensible move would be to accept the rejection of the law as it stands and draw up a new initiative that will receive congressional backing. However, this would leave Cartes in a vulnerable position, forced to secure the ANR-PC’s full support on an issue that he may have hoped he could already check off his list. Given the initiative remains unpopular with a section of the population and there are signs that the public is losing patience with the Cartes administration [RBS-14-01], keeping the ANR-PC on side is increasingly important for Cartes.

Since taking office last year Cartes has been able to get the ANR-PC bench to back all of his government’s initiatives, despite the fact that some legislators have expressed both disagreement with some of them and misgivings about Cartes’s leadership. The grumbling among ANR-PC ranks has continued as Cartes has largely refused to yield to the party’s demands for greater representation in his administration. Discontent within the ANR-PC is such that party president, Lilian Samaniego (Arnaldo’s older sister), has repeatedly called on the party to continue providing support for the Cartes administration even as party members clamour for greater representation.

The last time that Lilian Samaniego made such a call was after senate voted to repeal the Soat law on 4 February. After holding a personal meeting with Cartes at the presidential palace, Lilian Samaniego reiterated that “as an institution the Colorado party supports President Horacio Cartes and his government”, but that the party wanted to be able to develop closer ties with the government. Lilian Samaniego then revealed that Cartes had accepted her invitation to meet the ANR-PC’s 90-member governing board (which comprises the party’s 64 senators and national deputies, its 11 departmental governors and other party leaders) on 13 February to present his government plan and to answer some questions. According to Lilian Samaniego, the aim of the meeting was to bring the two sides closer together once again. “All of the Colorados made the party’s return to power with Horacio Cartes as president and Juan Afara as vice-president... we need to be tolerant, we need to listen to each other, that is how we managed institutionally recover the Colorado party, that is how we managed to return the party to power”, Lilian Samaniego said. While the meeting undoubtedly served as an important political test for Cartes, only the coming months will show if he has passed it successfully.

• Cartes government accused of being ‘Stronista’

On 10 February members of the main opposition Partido Liberal Radical Auténtico (PLRA), announced the creation of new party faction, the Frente Renovación. PLRA Senator Luis Alberto Wagner said the Frente would provide a more coordinated opposition to the government led by President Horacio Cartes – a task at which the PLRA party leadership has so far failed. Remarking on the performance of the Asociación Nacional Republicana-Partido Colorado administration led by President Cartes so far, Wagner said that the President’s authoritarian nature “reminds us of the dictatorship, of persecution and torture”, in allusion to the ANR-PC dictatorship led by General Alfredo Stroessner (1954-1989).

• Demanding explanations from Argentina

On 10 February Paraguay’s foreign minister, Eladio Loizaga, revealed that he has asked the Paraguayan embassy in Argentina to request information on the Buenos Aires government’s plans to build a uranium processing plant and nuclear reactor in the northern province of Formosa, which borders Paraguay. Plans to build the plant have been in the pipeline since last year, sparking serious concerns in Paraguay about the potential risks that this would represent for the country. Loizaga’s revelation comes after Argentina’s planning minister, Julio de Vido, told the Argentine press that a local firm has already been contracted to build the plant and reactor. Commenting on the issue, Loizaga said that it “concerns all of us, including the president, logically we need to have assurances that nothing is going to happen”.