To this day, Paraguay remains the only country in the Americas where a majority of the population speaks one indigenous language: Guarani. It is enshrined in the Constitution, officially giving it equal footing with the language of European conquest, Spanish. And in the streets, it is a source of national pride.
"Only 54 of nearly 12,000 schools teach Portuguese," said Nancy Benitez, director of curriculum at the Ministry of Education, of the language of Brazil, the giant neighbor that dominates trade with Paraguay. "But every one of our schools teaches Guarani."
Hidden from view behind its larger neighbors -- Argentina, Bolivia and Brazil -- this poor landlocked country of six million has been ruled by the Colorado Party since 1947. This gives the Colorados the questionable distinction of having maintained themselves in power longer than any other party in the world, edging out even North Korea's Communists.
For Paraguayans, that has meant 35 years of dictatorship under Gen.
''Paraguay's tobacco exports are, almost without exception, illegal,'' said Milton Cabral, vice president of Souza Cruz, the Brazilian subsidiary of British American Tobacco.
The situation is typical of many industries here. About one-fifth of the Paraguayan economy has been driven for years by illicit cross-border trafficking in everything from cigarettes and pirated Nintendo games to submachine guns and stolen BMW's.
The financial crisis that began in Argentina a year ago and soon spread to the rest of South America has been pummeling Paraguay, a landlocked nation of 5.5 million people sandwiched between Argentina and Brazil. The neighbors' troubles have become Paraguay's with a vengeance, and with fewer resources or options open to it, the country is now on the verge of bankruptcy and struggling to avoid an Argentine-style collapse.
Up to 95% of Paraguayans are mestizos, people of mixed Spanish and native American descent. Many speak the language of the indigenous Guarani; the rest are bilingual or only speak Spanish. There is a Japanese community, a legacy of post World War II migration.
Several countries in the south of Latin America have been feeling the lack of rain. Experts say it is caused by La Nina, the meteorological phenomenon where falling sea temperatures cause unusual weather patterns.
But Paraguay is the worst-affected country. Unlike neighbours Brazil, Argentina and Uruguay, its main income comes from agriculture and cattle farming, both severely damaged by the drought.
For most of its history, Paraguay has been almost a caricature of the right-wing South American military republic. Its infamous 19th-century dictator, General Francisco Solano Lopez had his own mother flogged in public and then made the nation's Roman Catholic bishops declare him a saint; its equally villainous 20th-century tyrant, General Alfredo Stroessner, turned the country into a haven for Nazi war criminals.
The Paraguayan economy’s progress toward greater economic freedom has been patchy, and the economy underperforms in many critical areas. The absence of an independent and fair judiciary weakens the rule of law and undermines prospects for long-term sustainable economic development. Corruption is pervasive, and the efficiency of government services is poor.
Pre-Columbian civilization in the fertile, wooded region that is now Paraguay consisted of numerous semi-nomadic, Guarani-speaking tribes, who were recognized for their fierce warrior traditions. They practiced a myth-based polytheistic religion, which later blended with Christianity. Spanish explorer Juan de Salazar founded Asuncion on the Feast Day of the Assumption, August 15, 1537. The city eventually became the center of a Spanish colonial province. Paraguay declared its independence by overthrowing the local Spanish authorities in May 1811.
More than 200 indigenous people who refused to vacate their land in eastern Paraguay were sprayed late last week with what some believe was pesticide, sending seven to the hospital, a government cabinet member said this week.
The 217 members of the Ava Guarani community in the Itakyry district suffered vomiting, diarrhea, headaches and nausea, said Esperanza Martinez, Paraguay's minister of health. Although one person was in serious condition, she said Monday, the rest are improving.