Paraguay declares emergency as violence spreads

Police in Paraguay dispersed hundreds of demonstrators yesterday after President Luis Gonzalez Macchi declared a state of emergency in response to widespread protests that have left two people dead.

Hundreds had gathered at the congress building in Asuncion on Monday to demand the President's resignation.

Two people died late that nightin the south-eastern city of Ciudad del Este, when police and soldiers fired tear gas and rubber bullets at demonstrators chanting anti-government slogans. Across the country at least 17 people were injured and some 200 people were arrested.

Yesterday, police went on the offensive in the capital and other cities. Demonstrators were pushed back at a roadblock in the southern city of Encarnacion and others were cleared off a highway 150 miles north-east of Asuncion.

President Luis Gonzalez Macchi, whose government has been dogged by a protracted economic slump, ordered more police on to the streets and imposed emergency measures suspending some civil rights. The state of emergency bans demonstrations and gives police greater powers of arrest. Some Paraguayans questioned the measures, saying the government had acted with too heavy a hand. Jose Ayala, a constitutional expert, said the decree was excessive because "there's no imminent danger to constitutional rule".

The government has blamed the protests on Lino Oviedo, a former army chief last reported to be living in Brazil. Efforts to extradite him have been unsuccessful. He is accused by Paraguayan authorities of planning the assassination of the Vice-President, Luis Maria Argana, in March 1999. Mr Oviedo has denied the charges.

Mr Gonzalez Macchi is struggling to tame a burgeoning economic crisis in one of South America's poorest countries. His popularity ratings have plummeted. Adding to his predicament is the slumping value of the Paraguayan currency, the guarani, which has weakened sharply against the US dollar amid concern that the country's banking system is on the verge of collapse. Argentina's worst economic crisis and Brazil's jittery markets have exacerbated Paraguay's financial worries.

Mr Gonzalez Macchi took office in March 1999 when president Raul Cubas resigned after days of rioting and turmoil provoked by the assassination of the former vice-president, Maria Argana. (AP)