In the Paraguayan Chaco, the dry and desolate western half of landlocked Paraguay, construction crews are laying down asphalt with eyes to the ocean. The central stretch of the Bioceanic Corridor—a transnational highway set to link the Atlantic and Pacific oceans—will cut through the Chaco, and Paraguayan President Mario Abdo Benítez is betting the route will become the backbone of new regional geopolitics—with Paraguay at the forefront.
Last year, Brazil and Paraguay broke ground on a bridge to connect Porto Murtinho, Brazil and Carmelo Peralta, Paraguay. The bridge will link these two upper Paraguay River port towns and become an international junction along the Bioceanic Corridor’s first 277-kilometer phase. Construction on this phase is underway between Carmelo Peralta and the Chaco hub of Loma Plata; from there, the nearly 2,000-kilometer route will continue on to the Argentine provinces of Jujuy and Salta, and ultimately to the Chilean ports of Antofagasta and Iquique.
The transnational project was set in motion in 2015, when President Abdo’s predecessor Horacio Cartes, and his counterparts from Argentina, Brazil, and Chile, met in Asunción to coordinate construction. In Paraguay, the corridor promises a new outlet to the Atlantic and Pacific oceans for Chaco soy and beef exports that currently rely on the Paraguay River to reach international markets. Shipments from the Brazilian-Paraguayan border to Antofagasta take an average of ten days by water, but according to the Brazilian Ministry of Foreign Affairs, the new land route will reduce the trip to three days, benefiting South American trade integration.
Paraguay’s Chaco region
Long overlooked by Asunción, the Chaco has become central to President Abdo’s economic agenda. The new highway is the first paved meter of road in the Department of Alto Paraguay, and the international bridge will be only the third to cross the Paraguay River on its thousand-plus kilometer course through the country. The corridor is the centerpiece of a broader $2.5 billion government campaign to invest in the Chaco, no small figure for a country with a GDP of $40 billion.
Paraguay, whose road infrastructure quality ranked 126 of 141 countries evaluated by the World Economic Forum in 2019, has recently turned to private investors to finance large-scale infrastructure projects. The government removed legal hurdles that blocked private bidding for public projects with the passage of the “Turnkey Law” in 2016. International financiers have become increasingly confident in the country’s strong macroeconomic fundamentals.
The Bioceanic Corridor is among several Chaco infrastructure projects tapping into new sources of financing. Backed by a $433 million bond issued on the international market, its first phase is slated for completion in 2023. Further south, a consortium of Paraguayan firms recently finalized plans to build a bridge connecting Asunción to Chaco’i, the virgin land directly across the river from Paraguay’s capital. The bridge, planners hope, will contain the capital’s urban sprawl by redirecting development from east to west, across the river to the Chaco. Investors are already buying large tracts of land along the river’s western bank, betting big on the Chaco as a new front for economic and demographic growth.
Other projects in the Chaco are relying on more traditional means of funding: multilateral lending institutions and the Paraguayan government are behind an ongoing $560 million reconstruction project of the Transchaco Route, a 559-kilometer stretch of highway from Asunción toward the Bolivian border.
Reshaping regional geopolitics?
Paraguay’s concentrated turn to the Chaco is a reversal of long-standing regional geopolitics. Asunción has historically looked eastward. In 2017, Paraguay exported $1.12 billion in goods to Brazil and $750 million to Argentina, dwarfing the $49.5 million in exports to its northwestern neighbor Bolivia.
The Paraguayan Chaco is tributary to the Atlantic, and Bolivia to the Pacific; given its large, sparsely-populated expanse, the Chaco represents a formidable obstacle to greater bilateral integration. Yet as development promises to reach further into the Chaco, President Abdo has pushed for stronger ties with Bolivia. He visited La Paz last June to commemorate the anniversary of the Chaco War peace treaty, and in November expressed Paraguay’s willingness to offer political asylum to Evo Morales despite the ideological divide between the two leaders.
Bolivia has also found increasing cause to embrace the Paraguayan frontier. After the International Court of Justice ruled in 2018 that Chile holds no obligation to negotiate with Bolivia—in the latter country’s campaign for sovereign access to the Pacific—Bolivian exports are eying the Chaco and the upper Paraguay River as increasingly viable outlets to international markets.
Before his ouster, Morales called the 2020’s the “Decade of the Atlantic,” directing significant resources to modernize upper Paraguay ports. President Abdo, too, is under political pressure to reassert a sense of sovereignty. After being widely accused of (and nearly impeached for) submitting to Brazilian interests in a bilateral agreement last year regarding the Itaipu Dam, the president is eager to recast the narrative that has plagued the first third of his term. A pivot toward the Chaco is a start: he has framed the Bioceanic Corridor as the core of a new sovereign and integrative geopolitics, claiming the corridor will convert Paraguay from a “country without coasts” into a “country of integration” and the Chaco from “an isolated department and district into a place of connection.”
From rhetoric to results: Will the Bioceanic Corridor come to fruition?
Despite the Abdo administration’s enthusiastic backing of the corridor, the viability of this “dry Panama Canal”—and the Chaco region as its integrative center—is uncertain. The Paraguayan Ministry of Public Works’ recent fumbling of infrastructure projects has undermined public confidence in its capacity to carry out large-scale development projects. Private development already underway in the Chaco—mainly near the Asunción metropolitan area—is largely owned by and marketed to foreign buyers and the Paraguayan elite. Such projects raise questions as to whether development spurred by the corridor will lead to equitable regional growth or end up in the pockets of multinational investors. The inauguration of a medical facility during President Abdo’s latest trip to the Chaco is a small first step toward greater support for the indigenous and Mennonite communities removed from the reach of state services.
In the Chaco, development is likely to accelerate deforestation, a concern voiced by conservation groups and that intensified last year as bushfires consumed hundreds of thousands of Alto Paraguay hectares. The corridor may also compete with other projects; a proposed Chinese-backed railroad from Brazil to Peru would pass through Bolivia instead of Paraguay. Although these plans remain far from reality, they cast doubt on the Bioceanic Corridor’s long-term competitiveness.
For most Paraguayans, however, the Chaco remains as foreign as another country, and the Bioceanic Corridor an afterthought in daily Asunción politics. Corruption and inequality are the concerns of the day, and it is Brazil, rather than the Chaco or Bolivia, that figures most prominently in Paraguayan regional affairs. The end of President Abdo’s term coincides with the 2023 renegotiation of Annex C of the Itaipu treaty, which regulates the price at which Paraguay sells hydroelectricity to Brazil. In the Paraguayan public sphere, treaty negotiations will be a key prognostic of President Abdo’s legacy. If they fail to produce more favorable terms for the country, any real or perceived successes of other infrastructure investment will be rendered mute—no matter how the new roadway through the Chaco pans out.
Greg Ross received his B.A. in History from the University of Chicago. He is a recipient of a Fulbright research grant to Paraguay and former research assistant at Centro para la Apertura y el Desarrollo de América Latina (CADAL).
