As a matter of policy, the government did not publish statistics on crime, so it was impossible to determine the incidence of crime, the frequency of particular crimes, or the direction of overall crime rates. The nation had a relatively homogeneous population, however, and did not appear to be troubled by the high rates of ordinary crimes, such as murder, assault, and theft, that have been associated with ethnic tensions or class divisions found in other areas of Latin America. However, three special types of crimes--corruption, smuggling, and drug trafficking--attracted media attention both locally and internationally in the 1980s.

Official corruption has been a very sensitive issue throughout the Stroessner regime and remained so during the late 1980s. National standards of public conduct appeared to accommodate a certain amount of personal intervention on behalf of family members, friends, and business associates. It was widely agreed, however, both within the nation and outside it, that serious breaches of these standards by senior civilian and military officials were rarely investigated or prosecuted. Indeed, efforts by officials to generate wealth or to influence the outcome of legal or business decisions, either on their own behalf or on that of relatives, friends, or associates, were treated by the government as a perquisite of office and a reward for loyalty. Allegations of high-level corruption and graft in the local press were officially frowned upon, and displeasure was expressed overtly by confiscating publications and arresting journalists and publishers. Nonetheless, some investigations and arrests of alleged perpetrators have taken place and been reported. One example was the arrest in late 1985 of twenty-nine senior bureaucrats and businessmen on charges of embezzlement of an estimated US$100 million from the Central Bank.

Involvement or connivance in smuggling appeared to be a significant element of official corruption. Most observers have estimated that the volume of illegal foreign trade at the very least came close to matching that of legal commerce during the mid1980s and possibly surpassed it (see External Trade , ch.3). In 1987 the leader of a business association of commercial and industrial interests estimated that contraband accounted for two-thirds of Paraguay's foreign trade. The avoidance of import duties represented a serious loss of revenue to the government. The flood of cheaper goods also harmed local producers, who could not compete with the artificially low prices of smuggled goods. The illegal commerce also had raised tensions with Brazil because it undercut Brazil's own economy (see Argentina and Brazil , ch. 4).

Smuggling has had a long history in Paraguay. During the 1950s, most operators worked on a small scale, but by the 1960s it was apparent that several persons had made fortunes in the trade. During the 1970s, smugglers moved into exports as well as imports. The trade began by focusing on such luxury items as whise84 iskey and cigarettes, but by the 1980s, smuggled goods included electronic goods, appliances, and even commodities such as wheat. Logs taken from Eastern Paraguay and sold in Brazil were a major illegal export item. The growing disparity between official exchange rates and market exchange rates during the 1980s made the trade increasingly lucrative, because traders were able to buy goods outside the country at market rates and then sell them in Paraguay at a price that was below that of legally imported goods but still high enough to render a substantial profit. Movement of the heavy volume of illegal trade necessitated crossing river borders controlled by the navy and crossing land borders and road checkpoints patrolled by the army and the police. Entry by air entailed transport through airports controlled by the air force. Despite these controls, few smugglers were arrested as the trade in illegal goods burgeoned and illegal markets thrived openly in the capital and other cities, especially Puerto Presidente Stroessner, which borders Brazil. The apparent tolerance of smuggling and the fact that several senior military and civilian officials had unaccounted-for sources of wealth contributed to a widely held local belief that there was official involvement in the trade.

An especially serious outgrowth of smuggling was the expansion into drug trafficking during the early 1980s, when Paraguay emerged as a transit point in the international drug trade. The nation was well situated for the role. It was located near Bolivia and Peru, which were major Latin American sources of illegal drugs. Moreover, Paraguay's sparsely populated and remote border areas presented difficulties for police surveillance. The nation had been used as a transit point during the 1960s, but international and local efforts had shut down the trade by the early 1970s. A series of seizures of drugs and of chemicals used to refine them during the 1984-87 period suggested that the problem had resurfaced, however. The problem first reached public attention in 1984 when a large quantity of chemicals used to refine coca paste into cocaine was seized by authorities in Paraguay. In 1986 and 1987, officials in Panama and Belgium discovered large amounts of cocaine that had been shipped from Paraguay. Again in 1987, evidence of Paraguayan involvement in drug trafficking surfaced after a plane carrying a major shipment of cocaine crashed in Argentina, having taken off in Paraguay. The Stroessner government denied charges by United States government officials that Paraguayan military and civilian officials were involved in the trade and vowed to take a tough stand against any drug traffickers. According to a United States Department of State official, Paraguay was also a major producer of marijuana for export.

Data as of December 1988