President Duarte: Optimistic about Paraguay's World Cup chances

But the small landlocked nation is set to gain international notice this weekend when its team play England in the World Cup.

Paraguayan President Nicanor Duarte Frutos has been talking to the BBC's Steve Kingstone about democracy in Latin America, the future of South America's trading bloc Mercosur, and what he thinks of Venezuela's President Hugo Chavez.

He also predicted the outcome of Saturday's match - not surprisingly, a Paraguayan win.

This is a country with a complicated history. Is democracy well established here today?

Latin American democracy is not 100% established. As long as first-world countries maintain their protectionism, close their markets to us, and fail to consider us a part of globalisation, democracy will always be complicated for us.

As long as knowledge - of science, technology and first-world markets - is not transferred to us, democracy will be complicated. But of course, strengthening democracy does not only depend on external forces, it also depends on us.

As long as leaders do not fight for greater transparency, better institutions, a more formal economy and competitiveness for our people - it's obvious that even with international backing we will continue to be poor.

And is democracy bringing benefits to the people, for instance in education and health?

Democracy allows us to spend our money in a better way, so that people participate and control it. We have had 17 years of transition into democracy. In 1989, General Stroessner had governed here for 35 years and there had been very little investment in education and infrastructure.

Since the arrival of democracy we have spent much more on education. What is the point of Paraguay having the biggest dam in the world, the Itaipu, if its most important resource - the people - don't get an education?

What use are fertile lands when our farmers cannot read the instructions on a bag of fertilizer? I belong to a new generation and we are struggling to rebuild the image and identity of Paraguay.

How is border security now?

We have a large land frontier with Brazil and a border with Bolivia, and as long as the State fails to strengthen and grow, these borders will most certainly continue to be a favourable environment for transnational crime.

I'm talking mainly about smuggling, but we are investing heavily in our armed forces, in the police, in our computer and radar systems. We asked the US, for example, to contribute much more to this.

They speak to me about the tri-border area, they talk about a lot of things which are probably true, but as a small country we can't do much more without technology, investment, helicopters and radar.

Are you worried that the rhetoric of President Hugo Chavez will damage prospects for investment in the region?

The words of Hugo Chavez could cause problems in certain sectors, but Paraguay's foreign policy is determined by domestic interests and I will do what suits Paraguay. If Mr Chavez is going to sell me cheap oil on good terms, then bring it on. Be my guest, Mr Chavez, because we need oil and we need them to fund us for at least 15 years.

And if President Bush concludes that Paraguay is on Chavez's ideological team?

I don't know if Mr Bush should be the one to determine the decision of the people. I don't think so. I'm against any kind of imperialist project or philosophy, whether it's European imperialism, North American imperialism, Japanese or Chinese imperialism.

I condemn all kinds.

And that of Venezuela?

I don't see Venezuela as an imperialist government. Venezuela has not developed capitalism to a high level. Imperialism is an extension of the capitalist model, combined with the control of science and technology, of political and military power. Venezuela does not have this. However, Venezuela has developed regional leadership.

As I told Donald Rumsfeld when he was here, lots of nationalist projects are going to spring up in Latin America if there is no investment. And Europe has to look at Latin America too. Europe and North America are asking Paraguay and Latin America to open our markets.

But how can we talk sincerely about open markets when those doing the asking protect their own markets? Are we going to be straight here? Are we really an important market for the EU or not? I think the EU is looking much more towards Eastern Europe.

Is Mercosur working? Is it benefiting Paraguay?

It's working. But that's not to say it's working well.

Why is it not working well?

Because it replicates a system that we here in South America condemn. We condemn European and North American protectionism, and yet here in Mercosur this same practice is being copied on a smaller scale in the case of lesser-developed countries.

Mercosur is an important treaty, which tried not only to be a customs union but also an instrument to combat poverty and strengthen democracy. Unfortunately, after almost 17 years, the people don't feel that Mercosur has meant much to them in terms of improving their lives.

We, in the smaller countries, see that non-tariff barriers still exist. Legally, we talk about zero-tariff reciprocity, but in practice we cannot send our beef to Chile because we have problems with Argentina. Our soya is held up in Brazil, we can't sell industrial goods to Brazil.

Yes we can sell raw materials more easily. So, free trade is still a more of a quaint notion than a reality that benefits everyone in Mercosur. Of course, in this world of economic blocs it's not easy to quit Mercosur, but we need to reinvent Mercosur.

Meaning what? Move forward to a full common market? Or move back from the customs union to a simple free trade zone?

We can be a common market with a special provision for the least developed countries. We're suggesting what you would call a "waiver" - so that the least developed countries can, in parallel with Mercosur, sign bilateral agreements.

It could be a commercial accord with the US or EU, or in the second phase a free trade treaty. You wouldn't destroy the customs union - we would simply act in parallel with Mercosur. At the moment Paraguay can't sign bilateral agreements, it has do it within the context of Mercosur. For instance, if we could sell textiles to the US market we would create 100,000 jobs. There's a sewing machine in every house in Paraguay.

So it's a decisive moment?

It's a crucial moment, what's at stake is the life and death of Mercosur. Sometimes, learning to live means learning to put up with your wounds - and in Mercosur, we're "surviving" rather than living. With lots of pain and many injuries.

And what of your own future? Do you want a second term of office?

I want to go home and look after my one-year old son. I am a family man. I don't know what will happen in 2008, but I'll continue to work with my country to strengthen democracy and freedom. With or without constitutional reform, my commitment to the nation will not change.

Have you not abandoned your hopes of changing the Constitution [to allow an incumbent president to seek re-election]?

It's very difficult but for God nothing is impossible. Herodotus, a master of ancient history, said that chance is the mother of all history. I don't know what is going to happen.

There are people who say that a second term would be anti-constitutional, anti-democratic

A second mandate is not possible if the Constitution does not allow it. If the Constitution doesn't allow it, there can't be a second mandate - that would be breaking the Constitution, and that is not something I am thinking of doing.

Secondly, if the Constitution says that re-election IS possible then that isn't anti-democratic. The country that prides itself on being the paradigm of democracy, the US, has re-election. Brazil and Argentina also allow re-election. Re-election is something almost all democratic countries have.

What has happened in Paraguay is that we had 35 years of dictatorship and the new Constitution created in 1992 came out of a climate of mistrust, obviously everyone who drew up the Constitution was thinking of what had gone before. So, they said no to re-election.

But re-election can be a necessary thing for a country because in the end it depends on the will of the people. If the leader has messed up, well, he won't be re-elected.

The World Cup: What's Paraguayan football like?

Paraguayan football is among the best in the world. Football is a way of motivating our people - it's a way of showing our countrymen what we're capable of.

On the pitch the Paraguayan has guts. He is mysterious. He has great passion and above all a strong spirit. His character, not just in football, but throughout our history has been to stand up to adversity, overcome barriers and to advance in spite of pain and sacrifice.

And the first game against England?

We will beat England - not because we want to fall out or because we consider them enemies - but because beating England will make us happy. Football unites us.

It could be 1-0, it could be 2-1, but we will win. Paraguay will reach the quarter finals. And once there we'll probably go through to the semi-finals.

Paraguay could play in the final - mark my words, Paraguay will play in the final in Germany. Victory begins up here - in the mind [points to his head].