Paraguay has recalled its ambassador from Brazil and frozen negotiations over the Itaipu hydroelectric dam following revelations that Brazilian intelligence spied on Paraguayan officials during the Bolsonaro administration, according to AP News.
The Paraguayan government acted after Brazil’s Foreign Ministry confirmed that its intelligence agency had infiltrated Paraguayan computer systems in 2022, targeting sensitive tariff negotiations related to the Itaipu dam, a joint mega-project producing 14,000 megawatts of electricity.
While Brazil’s current president, Luiz Inácio Lula da Silva, claimed his administration halted the surveillance upon discovering it, Paraguay demanded full transparency. Paraguayan Foreign Minister Rubén Lezcano stated:
It is a violation of international law, the interference in the internal affairs of one country in another. We are under constant attack, and the ministry is taking all necessary steps to defend our confidential information.
Paraguay has launched an investigation into the espionage, which reportedly occurred between June 2022 and March 2023, and summoned Brazil’s ambassador for explanations.
Decades-old flashpoint
The espionage scandal has derailed months of negotiations over energy costs from Itaipu dam, a symbol of asymmetrical relations since its 1973 treaty. Paraguayans resent provisions requiring them to sell unused electricity exclusively to Brazil at below-market rates, a clause many view as a vestige of Brazil’s historical dominance.
While diplomatic ties remain intact, the fallout underscores lingering distrust. Paraguay’s recall of its envoy reflects broader frustrations with Brazil’s perceived overreach. Analysts warn the suspension of dam talks could strain energy cooperation, though both nations rely on Itaipu’s output.
For now, Paraguay insists on accountability before resuming negotiations. The crisis tests Lula’s pledge to mend regional relations, even as Bolsonaro-era actions continue to haunt Brazil’s foreign policy.
