Paraguay Recalls Ambassador to Brazil After Espionage Discovery
President Santiago Peña of Paraguay. (Flickr)
Diplomatic tensions have erupted between Brazil and Paraguay following revelations that Brazil’s intelligence agency (Abin) spied on Paraguayan officials from 2022 to 2023. The accusations of espionage occurred under former President Jair Bolsonaro, a right-wing politician currently on trial for a coup attempt.
The scandal has threatened fragile bilateral negotiations surrounding the Itaipú hydroelectric dam, one of the world’s largest binational energy projectss. The hacks reportedly targeted the sensitive networks of officials involved in the negotiations. The scandal may threaten cooperation concerning the dam, whose ability to function depends on such a partnership.
The Brazilian foreign ministry confirmed on March 31 that the operation was active from June 2022 to March 2023, and was authorized under the Bolsonaro administration. The statement emphasized that the current administration of President Luiz Inácio Lula da Silva played no role in the operation and that it ended on March 27, 2023, following the appointment of a new Abin director by President Lula.
As a result of the revelation, on April 1, Paraguay’s foreign minister Rubén Ramírez announced the suspension of talks to revise ‘Annex C’ of the 1973 Itaipú treaty, halting the possibility of amending financial terms of surplus energy sales between the two countries. This is in reaction to the discovery of the targeting of the Paraguayan government, which was involved in these sensitive negotiations.
The Minister of Industry and Commerce, Javier Giménez, stated that the government of Paraguay is not sure of the extent of harm done in the nine months before the operation was suspended. Thus, Giménez and Ramírez publicly requested detailed explanations regarding the actions if there is to be hope for future collaboration and negotiation.
As of April 1, Paraguay recalled its ambassador to Brazil, a sign of diplomatic rupturing. Bolsonaro has yet to comment on the scandal.
The scandal underscores deeper issues in Brazil–Paraguay relations. Both countries are a part of Mercosur, the trade bloc comprising Argentina, Brazil, Paraguay and Uruguay, with other associate members. The trading bloc has been attempting to balance interests, especially as global trade pressures increase under the threat of American tariffs in the region. The scandal will likely only exacerbate these tensions.
It also raises concerns over democratic oversight and transparency in Brazil’s intelligence community, already under scrutiny since Bolsonaro’s term. Reuters reports the Bolsonaro administration was riddled with scandals, undermining the strength and stability of the country’s democracy, institutions and diplomatic credibility.
The Paraguayan government’s credibility has also been under close scrutiny as of recently. In February, 2025, a corruption scandal rocked the political system. Leaked WhatsApp messages implicated members of the ruling Colorado Party of which President Santiago Peña is a member.
With both countries on shaky ground, future negotiations and cohesion may prove to be increasingly difficult. As the fallout continues, both countries will face a test of their diplomatic resilience, commitment to transparency and ability to cooperate.