Land of the old general

Visiting Paraguay, Ben Davies finds a decaying country that still bears the scars of dictatorship

As I sat in a crumbling, empty hotel in Asunción, it was hard to imagine a good reason for coming to Paraguay unless one was a fleeing Nazi or fancied a career in smuggling. I gazed at the city from the panoramic terrace by the pool, which had long since ceased to be cared for. It looked utterly unappealing in the pouring rain.

Days earlier, I had crossed from Argentina, nearly 40 years after Graham Greene entered the country. He came looking for something "exotic and dangerous" - somewhere to base the closing chapters of Travels With My Aunt. Later, he wrote about his trip up the River Paraná and how he found a country still in the iron grip of General Alfredo Stroessner, a brutal dictator of German extraction who held power from 1954 until a coup in 1989. Greene described a place of considerable attraction: few cars, bountiful fruit trees and zero personal income tax. But he questioned whether he could ignore the stories of torture, detention and murder just to live in an old colonial house surrounded by servants for a few pounds a month.

In the time since it parted company with Stroessner, Paraguay has been far from stable: a vice-president assassinated, the last president tried and jailed on corruption charges, his predecessor forced to resign, and an attempted coup. The current leader, Nicanor Duarte Frutos, came to power in August 2003 pledging to root out corruption, yet Paraguay is still ranked among the most corrupt of countries. It is, to put it mildly, a basket case of a place. Perhaps that in itself is reason enough to come and take a look today, just as it was in 1969.

The general's long rule can be explained by his brutality and by his having allowed his henchmen free rein to smuggle what they liked into the country. In the process, many of them acquired large personal fortunes. Greene wrote that, after agriculture, smuggling was the country's chief industry. Today, in Stroessner's home town of Encarnación, on the border with Argentina, there is evidence everywhere of counterfeit and smuggled goods. A constant stream of hawkers goes from bar to bar selling dodgy electrical items and fearsome-looking flick knives. Violence and aggression are just beneath the surface, as young men parade noisily around the city in powerful, expensive vehicles. There are numerous gun shops - perhaps this accounts for the heavy armed presence outside the town's banks.

Paraguay's population is largely indigenous and poor. Those Europeans who moved here often came because they were fleeing persecution or prosecution. Some were trying to create new societies - religious, political, or, in the case of Friedrich Nietzsche's sister, Aryan. Others were just very badly informed. Around Encarnación, the German presence is particularly strong, with a number of colonies, and many of them were already long established when Nazi war criminals such as Josef Mengele sought refuge in the country.

Greene wrote of Israeli spies coming and failing to penetrate these close-knit communities, whose members were averse to "making trouble". In San Bernardino, a pleasant lakeside town not far from the capital, Asunción, the teenagers speak a strange hybrid of Spanish and German. When I arrived and asked for directions, an old man well into his eighties demanded, from the top of his horse: "Sprechen sie Deutsch?" When he learned that I was British, he turned and refused to say another word. That evening at dinner, I met other exiles, such as the French stockbroker, raised in England, who said that in Paraguay he lived "like an aristocrat", with servants, a chauffeur and a second home. His family asked about property prices in London and laughed with horror when told the average price of a flat. In Paraguay, £250,000 would build you Buckingham Palace, they said. The restaurant was run by a Portuguese woman and her husband, another Frenchman, who had apparently stayed in the country after being ripped off in a business deal.

Of course, in some respects the capital city has changed since Greene's visit. Enough time has lapsed since 1969 - when he noted a solitary skyscraper - for more to be built and then decay. Black mould creeps up the buildings in this humid place and no one has enough cash or cares enough to clean them. As in Encarnación, there are guns and guards everywhere. At the Museum of Independence, an armed man in uniform joined my guided tour - and listened closely as I was told that corruption in Paraguay had come about only because of dealings with the outside world. Outside the presidential palace, I was quickly jostled away by a man wielding an automatic weapon. He and his colleagues seemed to be expecting something to happen.

By the river, where Greene got his first glimpse of Asunción and where the huge, new parliament building now sits, a police vehicle armed with water cannon was parked. Behind it, half clinging to the city and half sinking into the marshes, was the capital city's largest shanty town, La Chacarita, which is flooded at least once each year. There is little to see or do in the centre of town; at night, the few bars offer karaoke. Prostitutes stand on many of the street corners. The "rich" live in the suburbs in huge, hideous, pillared houses with carriage driveways and high fences.

Greene observed that, in Paraguay, there is little respect for human life. "All along the road to Encarnación . . . are little signs and crosses to the dead," he wrote. And only some were accidents. In contemporary Asunción, the front page of a tabloid paper showed the picture of a mother, her arms outstretched. "I killed my children with these hands," screamed the headline. On the inside pages was a picture of a weeping father and two infants in their coffins.

During that evening in San Bernardino, I asked the French stockbroker where to go in Paraguay. He seemed at a loss, saying the "super-rich" holidayed on the beaches of Uruguay. It was not the first time I had been pointed to another country when asking for recommendations about where to go in Paraguay. A travel agent in Encarnación had studied a map of the country with me and denounced almost every place as "dangerous". He suggested a trip to Brazil. A week later, on that rainy day in an Asunción, no further persuasion was needed. I caught the first bus back across the border.