Introduction
The framework of hydro-hegemony (Zeitoun & Warner, 2006) emerged in the mid-2000s as a theory as an alternative to “water war” and “water peace” analyses of regional basin-wide power relations and resource control between states in transboundary water conflict and cooperation. With the notable exceptions of, for example, Hernández-Gutiérrez et al. (2022), Koff et al. (2016), and Regions & Cohesion's special issue on transboundary water basins (Kauffer & Medina, 2014), a relative empirical hydro-hegemonic blind spot can be detected in Latin America. Especially in one of the region's major basins, the River Plate (La Plata) Basin, this negligence is remarkable because it is the fifth largest river basin in the world and serves drinking water, irrigation, transport, industrial, effluent disposal, and hydroelectricity projects purposes to no less than five states: Argentina, Bolivia, Brazil, Paraguay, and Uruguay. Another underexplored issue within hydro-hegemony is the consequence of asymmetric power relations to mediate situations of low conflict and low to medium cooperation, along with identifying the drivers of interaction (Hayat et al., 2022). Within the River Plate Basin, Brazilian–Paraguayan relations in the context of the Itaipu binational hydroelectric dam are an example par excellence of such a situation (Zeitoun et al., 2020, pp. 145–150).
This article aims to shed new light on the Itaipu case from the perspective of International Relations (IR) and studies of transboundary water relations and regional integration. To do so, this article is structured as follows. The following section outlines the methodology used to answer the research question, after which the relevant literature on hegemony in transboundary water relations is presented, focusing on the South American context. The empirical section analyzes the case study, focusing on the most recent years to ensure the relevancy of the findings for present-day developments. It is found that the application of the framework of hydro- hegemony as conceptualized in the literature to date does not lead to an entirely satisfactory answer to the research question. The discussion will review this finding and complement the existing framework with the concept of consensual hegemony (Burges, 2008). By exploring such a neo-Gramscian perspective on forms of hegemony hailing from the region itself, this article purports to enrich the static forms of hegemony taken so far in theories of hydro-hegemony. The conclusion concludes the article.
Methodology and research design
In keeping with Hayat et al.’s (2022) appeal for analyzing asymmetric power relations to mediate low-conflict situations in hydro-hegemony, the La Plata case study has been selected as a most-similar case study. Regarding asymmetry, Brazil's GDP was almost 41 times higher than Paraguay's in 2021 (World Bank, 2023). As for low conflict and low to medium cooperation, the construction of binational mega-projects such as the Itaipu Dam creates long-term shared interdependencies that require intense cooperation on the one hand and potential sources of conflict on the other (Folch et al., 2019, pp. 60–62). Since its operationalization in 1984, the Itaipu Dam has become the second-largest hydroelectric dam in the world in production, reaching a world record of 103,098,366 megawatt hours in 2019. Being of fundamental importance for these states’ energy security, Itaipu covers around 11.3 percent of Brazilian and 88.1 percent of Paraguayan electricity consumption (Itaipu Binacional, 2020). This fact demonstrates only one aspect of the dam's profound effect on the River Plate Basin's economic, political, and social life (Lima, 2006). A within-case analysis has been executed for the period 2003–2022, starting with the election of President Luiz Inácio “Lula” da Silva (2003–2010) and ending in the last year of President Jair Bolsonaro's rule (2018–2022). During these years, the renegotiation of Annex C1 of the founding Itaipu Treaty (1973) gained increasing importance on the foreign policy agendas of Brazil and Paraguay as it expires in 2023 and, therefore, requires renegotiation (Pereira & Esposito, 2022). These negotiations exacerbate the hydro-hegemonic tensions between Brazil and Paraguay, which makes the case fit for analysis in this article.
The Itaipu dam's location within the region. (Authors’ elaboration.)
Citation: Regions and Cohesion 13, 3; 10.3167/reco.2023.130302
Process tracing was employed to analyze how the causal mechanisms hypothesized by the hydro-hegemonic framework have played out in the case at hand (Beach & Pedersen, 2019). The primary data comes from semi-structured interviews, complemented by a review of secondary sources from the literature. Online interviews have been conducted with relevant actors in the field from June to August 2020. These include national government officials from the finance or energy ministries or national electric utility companies in the region, officials working on (hydro)energy at multilateral organizations, and experts in the fields of regional cooperation, energy, or hydropolitics in South America. The interviewees were coded I1–I13 for in-text referencing (see Appendix). The interviews have been analyzed by content analysis, constructing categories from the hydro-hegemonic framework and coding the categories, resulting in a systematic overview of the main issues and arguments after analysis.
Literature review and conceptual framework: Hydro-hegemonic analysis
Until the mid-2000s, a dichotomy between scholarship focusing on ‘water wars’ on the one hand and water cooperation on the other existed in studies of transboundary river relations (Kauffer & Medina, 2014). Wolf (1995, 1999) argued that the number of conflicts purely motivated by water scarcity has been negligible. Contrarily, examples of water-sharing treaties are numerous. For instance, in the Colorado and Tijuana Rivers and the Rio Grande context, a binational treaty from 1944 effectively manages conflict and cooperation between the two countries (Gonzalez-Velazquez & Castro-Ruiz, 2022; Sanchez & Cortez-Lara, 2015). In the River Plate Basin context, analyses mainly focused on international agreements and subsequent institutions (e.g., da Silva & Hussein, 2019). Gilman et al. (2008) maintain that treaty arrangements for cooperation over shared water resources in the River Plate Basin have been relatively successful. Bilateral and trilateral agreements and institutions have led to significant economic gains for all riparian states, albeit at the cost of considerable negative externalities, mainly environmental degradation. Pochat (2011) underlines the importance of the Coordinating Committee of River Plate Basin Countries and the subsequent 1969 River Plate Basin Treaty in this process. Villar et al. (2018) recognize many multilateral institutions in the basin but show that these institutions have achieved relatively few concrete actions, raising doubts about their efficiency. According to Covarrubias (2019, p. 124), this is a common phenomenon in regional Latin American cooperation, where regional organizations are often announced with great fanfare, after which they quickly become “empty shells.”
Scrutiny of the conflict-cooperation debate led to arguments that such a dichotomy “refutes the reality of the vast majority of contexts where cooperation and conflict co-exist, and perpetuates the paradigm that any conflict is ‘bad’ and that all forms of cooperation are ‘good’” (Zeitoun & Mirumachi, 2008, p. 297). In an attempt to create a more sophisticated framework to analyze riparian power relations, Zeitoun and Warner (2006) developed the hydro-hegemonic framework. Embracing more complexity and varying degrees of conflict and cooperation, the framework maintains a more dynamic perception of conflict, defined as “some form of disagreement over ideas, principles or sovereignty in which the opposing forces struggle for victory” (Zeitoun & Warner, 2006, p. 440).
Essential concepts in hydro-hegemony
Essential concepts in hydro-hegemony are the power that substantiates hegemony and forms of hegemony. A classic definition of power was presented by Dahl (2006) as A's capacity to make B do something that A wants and that B would otherwise not do. Lustick (2002) has identified four different sources of power. Coercive power concerns the hegemon possessing or being able to mobilize capabilities to employ the use or threat of force. Examples are military might, economic strength, modes of production, and access to knowledge (Strange, 1987, p. 132). In transboundary water relations, capabilities can also include the riparian position or access to water (Zeitoun & Warner, 2006, p. 78). Secondly, utilitarian power holds that non-hegemons exchange compliance with the hegemon for something valuable. Thirdly, normative power is at play when the non-hegemon consciously believes compliance with the hegemon is in its best interest. An example is a hegemon referring to international law to gain legitimacy for its claims or practice and to damage the non- hegemon's reputation in the case of noncompliance (Dellapenna, 2003, p. 289). Lastly, discursive hegemonic power, in line with neo-Gramscian theory, means that the hegemon can structure knowledge so that compliance with the hegemon becomes common sense (Strange, 1994, p. 176).
When states obtain unmatched power in a particular international system, a situation of hegemony can emerge. Hegemony is a highly polemic concept in the analysis of power relations. State-centric perspectives perceive hegemony as the situation in which one state controls the international or regional system because it possesses unparalleled power based on military and economic might (Keohane, 1980). In structural realist scholarship, hegemonic power is tied to a particular state dominating or acting as a stabilizing force in an international or regional system. Neoliberal institutionalists maintain that hegemony can be overcome by institutional engineering and complex interdependence (Keohane, 1980). Critical IR theories, such as the neo-Gramscian school, focus on a more subtle and social form of hegemonic power. In this view, dominant social groups actively create a shared worldview or ideology, proliferated in all spheres of society. Compliance with the hegemonic group(s) becomes common sense, or, contrarily, noncompliance becomes insane (Lustick, 2002; Rupert, 2009).
Zeitoun and Warner's (2006) conception fits a trend of rejecting the customary realist conception of hegemony, instead “modulating” concepts of hegemony and dominance based on hard power, with the work of (neo-)Gramscians addressing ideology and social consent (Burges, 2015). For authors such as Robert Cox, a dominant state can lock its long-term interest into the very structure of the state system based on consent to continue its supremacy—as in Susan Strange's conception of international regimes (Strange, 1987). If the hegemonic arrangement is perceived as acceptable and relatively beneficial by the non-hegemons, such regimes provide stability and predictability as a shared benefit in a region.
By contrast, in a situation of dominative hegemony, the hegemon aims to constantly increase inequity between itself and non-hegemons to safeguard its position. Consequences are negative effects on the international system, such as the inevitability of a certain degree of conflict (Zeitoun & Warner, 2006). The behavior of the hegemon, then, can vary, ranging from domination to a leading role (Zeitoun & Warner, 2006). In a leading role, the hegemon fortifies its position by creating an international system of international institutions that enhances stability and prosperity in non- hegemonic states, benefiting all riparian states and more equitable water sharing (Hayat et al., 2022). The central concept related to this argument is hegemonic stability, developed by Keohane (1980).
The framework of hydro-hegemony
The approach taken here purported to analyze the form of hydro-hegemony in the Itaipu case in line with the classical framework of hydro- hegemony as developed by Zeitoun and Warner (2006). The framework arrives at a form of hydro-hegemony by analyzing the control of resources through the strategies employed by riparian states. In the case of water scarcity, interstate power struggles focus on control over greater flows. In the case of abundance, such as in the River Plate Basin, states compete for control over water management and connected resources, such as hydroelectricity. Control can be shared, consolidated, or contested. In a situation of shared control, some cooperation exists, and transboundary river relations are relatively stable, mainly due to the leading role of the most powerful state. Consolidated control can be achieved both in a leadership context, providing public goods to the collective, and in a dominative hegemonic context, exerting power over others, depending on the strategies employed. In general, consolidated control by the hegemon leads to weaker states having less control, a situation that they aim to change. As control is firmly consolidated, however, competition only occurs cautiously. Contested control is the result of power relations becoming more equal. This situation often involves instability and fierce competition (Zeitoun & Warner, 2006).
To achieve consolidated control, riparian states follow several strategies, namely resource capture, containment, and integration, substantiated by Lustick's (2002) power sources. Resource capture occurs when “powerful groups in society . . . shift resource distribution in their favor” (Homer-Dixon, 1999, p. 177). A resource capture strategy is employed unilaterally, meaning that “a riparian, in the absence of formal understandings, moves ahead with projects that affect the flow or quality of the resource” (Waterbury, 1997, p. 279). Next to upstream projects, coercive tactics can enforce a resource capture strategy. Military force has direct effects but is costly and, in practice, barely used in transboundary (Wolf, 1999). States can also engage in undercover operations, trade embargoes, espionage, or propaganda to weaken their competitors’ political, military, or hydraulic resources.
A containment strategy involves active engagement with, or co-optation of, competitors to integrate or contain them in the most asymmetrical position possible. Normative and discursive hegemonic power sources are often used to implement such a strategy. Normative power sources are mainly employed through treaties and agreements. Several characteristics make treaties prone to the exploitation of non-hegemonic riparian states in a hydro-hegemonic configuration. Firstly, treaties are hard to enforce multilaterally as violations of a treaty by the hegemon itself are difficult to punish. Secondly, existing inequalities may be institutionalized, in which the hegemon uses coercive or normative power sources to get the weaker state to sign. Then, it can use the normative power derived from the treaty to deepen unequal relations further. Thirdly, bilateral treaties can exclude non-signatory riparian states from participating in discussions that affect their riparian position (Zeitoun & Warner, 2006).
Discursive hegemonic tactics are applied both in resource capture and containment control strategies. Essential discursive hegemonic tactics are securitization and sanctioned discourse or knowledge construction. Securitization holds that, through speech acts, states propel an issue into the realm of security by treating it as an existential threat to the state, justifying exceptional, sometimes undemocratic measures. Potential criticism in society is silenced since criticizing measures to protect national security is easily equated with treason (Buzan et al., 1998).
Sanctioned discourse and knowledge construction include a normative delimitation that separates the type of discourse perceived as politically acceptable from other types considered politically unacceptable. By sanctioning politically unacceptable discourse, discursive hegemonic knowledge is constructed. In water-related issues, sanctioning discourse to construct hegemonic knowledge could veil negative aspects of riparian relations, such as an inequitable distribution, while highlighting positive elements, such as technical or issue-specific cooperation (Zeitoun & Warner, 2006). In the example of the Orokawe hydroelectric dam in Angola, indigenous groups opposed its construction by trying to shift the discursive hegemonic knowledge in the direction of the negative impacts of human security and violations of the United Nations Declaration on the Rights of Indigenous Peoples (Meissner & Warner, 2021).
An integration strategy involves utilitarian power sources, such as benefits and privileges provided to other riparian states through the hegemon's relative power. Utilitarian tactics include diplomatic recognition, military protection, trade incentives, and monetary benefits (Zeitoun & Warner, 2006). Joint dam projects have often been hailed as symbols of regional integration (Meissner & Warner, 2021), as they create shared necessities and subsequent “spillovers” that potentially drive integration. While capture is based on negative incentives and unilateral behavior (“sticks”) and containment on a mix of “sticks” and “carrots,” an integration strategy, “where the hydro-hegemon concedes some of its privileges, may work especially well with several incentives such as military protection, trade benefits, or joint hydro-projects,” is predominantly based on carrots (Biba, 2021, p. 220)—although the benefits for non-hegemons may be more of by-product (Biba, 2021).
Coercive water resources reinforce the strategies previously outlined. These resources stem from the international context, existing out of global political and economic trends, alliances, and the absence of enforceable international water law. International support in the shape of alliances or funds is a potential source of power and the ability to mobilize finances. A state with depleted financial resources desperate for funding is forced to fulfill a donor's demands. The riparian position of a state is a more static coercive resource. Actions by upstream riparian states confront downstream states with faits accomplis. Examples of tactics a state can follow due to its upstream riparian position include river diversion, water overuse, contamination, and flow delay power (Zeitoun & Warner, 2006).
In summary, in the hydro-hegemonic framework on which this article is built, the form of hydro-hegemony determines the nature of interaction in a given basin and the corresponding degree of conflict or cooperation. When assuming a leadership stance, the hydro-hegemon will probably follow an integration water control strategy to ensure cooperative interactions under its guidance. An equitable distribution of water resources will likely be the result. A dominative hydro-hegemon will aim to prevent competition through resource capture or containment strategies to maintain unilateral resource control. This results most probably in an inequitable distribution of resources. A cold conflict will result if the non-hegemon contests the situation but cannot match the hegemon's power. If there is a contestant to the hydro-hegemon's power, the “consent” part of hegemony is impaired. Consequently, there is no fully realized hydro- hegemony anymore, leading to more uncertainty and the potential for a violent conflict (Zeitoun & Warner, 2006). These considerations are graphically represented in Figure 3.
Hydro-hegemony under scrutiny
In an extensive review of the literature on hydro-hegemony, Hayat et al. (2022) list several points of criticism from the literature. Hydro-hegemony draws too much from state-centric, mainly realist IR theories, perceiving interstate interactions as zero-sum power games (Furlong, 2006). This perspective neglects the possibility of positive-sum cooperation or overcoming hegemony through institutional engineering, as studied by regime theory (Lopes, 2012) or legal institutional theory (Zawahri & Mitchell, 2011). Moreover, hydro-hegemonic theory draws heavily on state power (e.g., Mirumachi, 2015), assumes state sovereignty as an uncontested attribute in IR (Zeitoun & Warner, 2006, p. 453), and does not engage enough with literature that allows for a reassessment of power by challenging the notion of state boundaries (Ashley, 1984; Walker, 1993). Consequently, it has failed to incorporate neoliberal institutionalist views and insufficiently recognizes critical hydropolitical perspectives on the potential of actors to influence transboundary water dynamics beyond interstate relations (Warner, 2012; Zawahri & Hensengerth, 2012), such as local institutions (Cortez-Lara et al., 2019), NGOs (Suhardiman & Giordano, 2012) or companies (Shiva, 2002). Finally, from an international law perspective, Gebrehiwet (2020) insists that the notion of unilateral hydro-hegemony is null and void, while Rossi (2021) claims the structures of international law have already taken a hegemonic hold, overriding unilateral (“hy-egotistical”) actions.
Studies of hydro-hegemony should not perceive transboundary water issues as unidimensional and zero-sum games and demonstrate that there exists a nuance in the majority of contexts where conflict and cooperation coexist (Zeitoun & Mirumachi, 2008, p. 312). As a way forward, Hayat et al. (2022) suggest analyzing the consequences of asymmetric power relations to mediate situations of low conflict and low to medium cooperation, including identifying the drivers of interaction. This article will follow this suggestion by analyzing asymmetric Brazilian–Paraguayan hydropolitical relations.
Empirical case analysis: A hydro-hegemony perspective on Itaipu's resource control
A small but water-rich state, Paraguay has a niche in the regional hegemonic rivalry between Brazil and Argentina. Brazil needed Paraguay for the Itaipu Dam on the river Paraná, necessitating a deal between Brazil and Paraguay in the 1970s over the objections of Argentina (Oelsner, 2005). Being unhappy with the terms of the agreement, Paraguay has repeatedly pushed for renegotiations. Momentum grew when Lula da Silva assumed power in 2003. Brazil began to privilege cooperation with South America, seeking more autonomy and diversity in Brazil's foreign policy (Paula, 2013). This development coincided with the election of Fernando Lugo (2008–2012) in Paraguay, which ended the 60-year rule of the conservative Colorado Party, partly due to the notion of “hydroelectric sovereignty,” the campaign promise to attain more control over Paraguay's resource, such as hydroelectricity from Itaipu (Folch, 2015). This led to an amended treaty in 2009. During Dilma Rousseff's administration (2011–2016), Brazil's focus on regional integration somewhat stalled, and relations with Paraguay became more distant after the impeachment of Lugo, by some classified as a coup d’état (Pereira Carneiro & Esposito Neto, 2022). Brazilian foreign policy shifted toward more traditional partners outside South America during Michel Temer's presidency (2016–2018), a policy that was deepened under Jair Bolsonaro. The latter dealt with the expiration of Annex C of the Itaipu Treaty through secret negotiations with Paraguay's president, Abdo Benítez (2018–present). In March 2021, it was decided to postpone the renegotiations until after the COVID-19 pandemic (Pereira Carneiro & Esposito Neto, 2022), which will be discussed further below. In the following sections, the strategies and tactics employed by Brazil and Paraguay to control Itaipu's resources will be analyzed for 2003–2022. The form of hydro-hegemony will be established from the type of strategies, tactics, and resource control.
Resource control strategies
Brazilian strategies
Brazil has used a mix of containment, integration, and, to a lesser extent, resource capture strategies to control Itaipu's resources. In line with Wolf's (1999) claim that the threat or use of force to capture more resources is rarely applied in transboundary water relations, this power source to substantiate resource capture was not detected here. A more structural power source that can be used as a potential means of pressure is Brazil's ability to influence the Paraná River upstream by altering the river's flow through new or existing dams on Brazilian territory. As put by an interviewee: “Whatever decision Brazil takes upstream, towards the Amazon region, affects the downstream flow in the River Plate Basin” (I12).
Many examples of a Brazilian integration strategy, substantiated by utilitarian power sources, can be found from 2003–2022. A significant structural utilitarian power source comes from Brazil having paid the dam initially, creating a large foreign debt of Paraguay to Brazil. This debt allowed Brazil to set favorable conditions, such as the obligation for Paraguay to sell all surplus energy—amounting to 95 percent—to Brazil at a below-market price. From 1985 to 2012, Brazil consumed 93 percent of Itaipu's output. Brazil's national electric utility company, Eletrobras, bought Paraguay's share for approximately US$ 10 per megawatt-hour (MWh), reselling it for between US$ 20 and US$ 60 on its domestic market (Folch et al., 2019; Paula, 2013). Moreover, the analysis demonstrates the importance of the integrative pressures as a result of mutual necessities that come with the construction of the dam and the establishment of Itaipu Binacional, the binational state-owned firm operating the dam: “In the case of Itaipu, [Brazil and Paraguay] used two national public utility companies and one public binational company. By doing that, one creates necessities. For example, if Itaipu ceases its activities, gigantic problems will surface for both Brazil and Paraguay” (I10).
Utilitarian tactics of a more specific nature can be identified, too. During the government of Lula, utilitarian tactics were twofold. First, a priori, the Lula government did not consider any negotiation with Lugo but was willing to listen to Paraguay's demands. For reasons described in this article, the two governments ultimately opened negotiations, leading to a three-fold increase in the value of Paraguay's energy purchases, freedom of negotiation between Paraguay and other Brazilian companies, and the possibility for Paraguay to sell its surplus to third parties (Pereira Carneiro & Esposito Neto, 2022). These benefits can be perceived as a utilitarian tactic within Brazil's regional foreign policy. Brazil, under Lula, engaged in a regional integration strategy through multilateral organizations UNASUR,2 Mercosur,3 and IIRSA.4 Interviewees mentioned that Itaipu-connected projects received funding through these programs, through which Brazil used its utilitarian power to act as a regional hegemon, also in the hydroelectricity sector. For example, “Paraguay receives the most. Then comes Uruguay, and the ones that receive less are Argentina and Brazil. Contrarily, Brazil is the one that puts in the principal part” (I11). Vice versa, it has also been claimed that the construction of Itaipu was an essential milestone in the regional integration process, leading to, for example, Mercosur (Pereira & Esposito, 2022).
During Dilma Rousseff's government (2011–2016), the integrative regional policy weakened, especially in the energy sector. An interview, for example, stated that “when Dilma Rousseff enters government, less emphasis is put on South American integration. Moreover, a large oil and gas reserve is discovered off the coast of Rio de Janeiro. . . . Here, regional energy integration in South America ends” (I1). After Rousseff, Temer, and Bolsonaro maintained outright isolationist foreign policies. In the case of Itaipu, however, continuity can be observed. Bolsonaro continued to grant Paraguay utilitarian benefits in the shape of civil works in the context of Itaipu, paid by the Brazilian part of Itaipu Binacional. For example, from the analysis, it appeared that “Paraguayan Itaipu pays for the bridge in Chaco del Norte. Brazilian Itaipu funds the one in Presidente Franco. . . , which is more expensive since Brazil has more resources” (I11).
Brazil also maintained strategies to contain Paraguay, implemented by a mix of normative, utilitarian, and discursive hegemonic tactics. During Lula's government, Brazil initially refused to renegotiate the Itaipu Treaty based on both normative and utilitarian arguments. Normatively, Brazil's foreign ministry referred to the Treaty of Itaipu. It claimed to have upheld the treaty in perfectly good faith, while Paraguay was damaging Brazil by trying to violate it. This aligns with Dellapenna's (2003, p. 289) premise that hydro-hegemons may refer to international law to gain legitimacy for their claims and damage the non-hegemon's reputation. It can be claimed that the Itaipu Treaty is a clear example of such institutionalization of existing inequalities described by Zeitoun and Warner (2006). This sentiment also emerges from the data: “I am not against high levels of institutionalization in the Southern Cone. I am against the inequity when applying the rules that come with supra-nationalism” (I3). By using a utilitarian tactic (paying for the dam) in the short term, Brazil enabled itself to employ a normative tactic (upholding the Itaipu Treaty) in the long run, giving it a stick to contain Paraguay's position when trying to modify the dam's resource control in its favor.
A discursive hegemonic tactic to substantiate Brazil's containment strategy can be observed, too. In mid-2019, a scandal was revealed in which Abdo and Bolsonaro had reached a secret deal in which part of the Lugo-Lula deal was reversed, leading to less revenue for Paraguay and the obligation to sell electricity directly to Brazil. Abdo argued that Paraguay agreed upon these terms to create goodwill in the run-up to the treaty's expiration in 2023 and subsequent negotiations. When the scandal almost led to the impeachment of Abdo, Bolsonaro agreed to cancel the deal and saved Abdo (Elder, 2019). This example demonstrates the Brazilian awareness of the treaty negotiations as a sanctioned discourse in Paraguayan society. As mentioned in an interview with a Paraguayan official: “Here, whenever we talk about these issues [of power asymmetries and Itaipu], we tend to mix cultural and historical reasons. So, often, it is an issue that generates a lot of political and social controversies” (I11).
Paraguayan strategies
Paraguay profited from Brazil's integration strategy by having a dam built primarily with Brazilian resources, which it had to pay back mainly by selling cheap surplus energy to Brazil. It aimed to change the conditions of those sales and the decision-making power within Itaipu Binacional through a resource capture strategy. However, Paraguay has no resources to substantiate that strategy with utilitarian power resources against Brazil. Hypothetically, it could offer Brazil material incentives through cheap electricity, but equaling this distribution is precisely the issue Paraguay aims to change. Therefore, Paraguay has mainly employed discursive hegemonic tactics and mixed normative-discursive hegemonic tactics. Under Lugo, Paraguay's Foreign Ministry set up a Hydroelectric Commission, consisting of former leaders of student protests against then Paraguayan dictator Alberto Stroessner. The Commission aimed to spread a narrative of a mistreated and exploited Paraguay, both in Paraguayan and Brazilian societies (Folch et al., 2019, pp. 123–124). This tactic was highly successful in Paraguayan society but proved futile in Brazil. Interviewed Brazilian officials even strongly maintained a counter-narrative that Paraguay had used Itaipu to distribute wealth among internal elites and not to develop its industry:
Today, Paraguay has a choice between renegotiating long-term export contracts with Brazil that guarantee revenue and using its energy to develop domestic industries. This sets in motion a series of internal interests we do not know about. Their choice is to renegotiate for a little cheaper energy instead of using its energy to develop and export to other countries. (I7)
Paraguay, however, aimed to influence Itaipu's resource control through a second tack: the Paraguayan members of the board of Itaipu Binacional. The board comprises six Brazilian and six Paraguayan directors appointed by the two national electric utility companies, ANDE and Eletrobras. These directors were more technocratic than the ministry's commission and engaged in informal relations with their Brazilian counterparts. They continuously expressed their determination to adhere to the Treaty while trying to invoke the legal doctrine that treaties can be changed if the conditions under which they have been signed have changed, too. In this case, it was argued that electricity prices had changed to the extent that one could speak of new circumstances (Folch et al., 2019, p. 113). This constructed a narrative of changing the Itaipu Treaty within its normative framework, exemplified by the following quote from an interviewed Brazilian official: “In the past, Paraguay had a way smaller economy than Brazil. Today, some asymmetries between the strength of the two economies still exist. However, Paraguay has grown way more than Brazil. So, in 2023, it is another Paraguay in the discussion of the renovation of Annex C of the Treaty of Itaipu” (I9).
This change in hegemonic discourse was achieved by influencing informal relationships instead of the general public. Here, the importance of personal relationships in South American international relations (e.g., Malamud, 2005) is underlined. Interviewees also pointed out the importance of relationships between bureaucratic teams, for example, within the Itaipu Binacional board, and between national electricity companies: “The technical teams [of the national electricity companies] are there permanently. So, in my experience, on the macro level and the minister level, the truth is that they are not very successful in achieving integration. In Latin America, the most successful has always been to improve human relationships” (I4).
Integrated and Contained
For 2003–2022, it can be established that Brazil has followed a strategy that combined integration and containment strategies to control Itaipu's resources. These were implemented by utilitarian (paying for the dam), normative (the Itaipu Treaty), and discursive hegemonic (secret negotiations) tactics. Paraguay, in turn, aimed to capture more resources through normative and discursive hegemonic tactics by influencing the public, establishing informal relations at the presidential and dam administration levels, and changing the hegemonic treaty narrative.
Controlling Itaipu's resources
Several characteristics of Brazilian–Paraguayan cooperation and shared control of Itaipu's resources in the period 2003–2022 can be detected. The treaty of 1973 includes bottom-line guarantees on a 50-50 distribution of Itaipu's electricity, and decision-making power within Itaipu Binacional is seemingly equally divided between six Paraguayan and six Brazilian directors. The interaction between the two states was often described as cooperative by the interviewees, for example: “Itaipu. . .is one of the major exponents of energy cooperation of the country” (I13). In Itaipu's day-to-day business, Itaipu Binacional runs the dam cooperatively and even initiates new cooperative projects, such as the Integration Bridge.
Within this cooperative framework, however, Brazil and Paraguay both attempt to consolidate control over the dam's resources. Several indicators point toward Brazilian control. First, by the mix of normative tactics in the shape of the Treaty of Itaipu and the utilitarian argument that it has paid for the dam, Brazil has secured a continuous flow of 93 percent of Itaipu's enormous output over the period 1985–2019. This unequal distribution has been underlined time and again in the interviews. Through the Itaipu Treaty, Brazil has firmly consolidated this Paraguayan share because the Treaty makes it normatively impossible for Paraguay to sell its share to third countries. Second, decision-making power within Itaipu Binacional's board seems equally distributed. However, some directors are “executive” directors, enjoying more authority. The financial and engineering directors, which are the most essential, are always Brazilian, which gives Brazil more decision-making power (Folch et al., 2019, pp. 44–45). This adds to Brazilian control. Lastly, the analysis demonstrated that Paraguay's neighboring countries are not fond of letting electricity flow through their networks because of diverging interests and low levels of integration. For example:
[Paraguay] asked to export to Uruguay through the Argentine grid. . . . They asked to export at a much higher price than the price at which they sell Yacyretá’s energy to Argentina. . . . Paraguay maintained that Argentina should adhere to Article 1 of the Mercosur Constitutive Treaty, which discusses the free movement of goods, services, and factors of production. Argentina rejected this on the basis that it did not want to put its market in jeopardy. (I12)
Paraguay, however, has not always willingly accepted Brazilian control in the period 2003–2022. Under Lugo, a proactive stance on hydroelectric sovereignty was assumed, and the status quo was contested. Through knowledge construction that changed the hegemonic discourse on the Itaipu Treaty, the treaty was renegotiated, and Paraguayan control slightly increased. For example, after renegotiating Lula and Lugo's renegotiation of the Six Points, the meager price that Brazil paid for Paraguay's Itaipu surplus was slightly increased, ANDE was allowed to set up a subsidiary in Brazil, and the intention was expressed to solve the Brazil-skewed decision- making power in Itaipu Binacional's board. After Lugo, Paraguayan presidents Cortes and Abdo maintained a more nondisruptive stance toward Brazil and Itaipu. In 2019, toward the end of the period under scrutiny, the expiration of Annex C of the Itaipu Treaty in 2023 and subsequent negotiations already forced Abdo to negotiate despite his nondisruptive stance, which was done through secret negotiations. An actual contestation of Brazil's resource control consolidation cannot be recognized here.
Paraguay lacks Lustick's (2002) coercive, utilitarian, and normative dimensions of power to compete for Brazil's consolidated resource control over Itaipu's resources. The knowledge-constructing tactics it used to bend the hegemonic discourse on Itaipu in its favor did not suffice to compete with Brazil over its consolidated control. Considering Paraguay's limited power resources and its careful approach toward Brazil, especially during the Cortes and Abdo administrations, Paraguay's competition toward Brazil's consolidated control can be described as cautious at most.
The combination of resource control consolidated by Brazil and the cautiously competitive stance by Paraguay is in line with Zeitoun and Warner's (2006) continuum in Figure 2. In the foregoing, it has been argued that the Itaipu case can be placed on the left-hand side of this continuum at the point of shared resources and cooperative interaction. After establishing that the Itaipu case also displays characteristics of Brazilian consolidated control and Paraguayan cautious competition, the continuum slightly moves toward the right, between shared control and cooperative interaction on the one side and consolidated control and cautiously competitive interaction on the other.
• Continuum of forms of interaction over transboundary water resources (adapted from Zeitoun & Warner, 2006, p. 444, cited with permission).
Citation: Regions and Cohesion 13, 3; 10.3167/reco.2023.130302
Form of Brazilian hydro-hegemony
Several characteristics of a leadership role can be attributed to Brazil in the Itaipu case from 2003–2022. Some of these are constants throughout Itaipu's history, such as Brazil's willingness to assume Itaipu's enormous costs, leading to international benefits. Although it has been established that resources have been distributed unequally, Paraguay has still received considerable revenue and electricity through a shared international institution, Itaipu Binacional. The analysis demonstrated the importance of this stability, especially in terms of Malamud's (2005) argument that South American international relations are highly dependent on personal relationships and presidents’ ideological affinities, as the interviewees also expressed.
Bilateral and long-term relations depend on the political movements of the governments. Accordingly, everyone comes across some kind of conflict at some point. . . . So, if you are working with some kind of infrastructure that will be there for 30 years or more, not having an institutionalization that can solve conflicts is one of the region's major challenges. (I10)
During the first Lula government, Brazil assumed a leading role in the region, in line with its ambitions to transform Brazil into a global and regional power. In doing so, Brazil assumed high transaction costs, for example, by providing the largest share of the IIRSA regional convergence fund, of which a large part accrued to Paraguay. In the case of Itaipu, the Lula government allowed ANDE to integrate more into the Brazilian energy market and granted some direct benefits, such as a higher price for Itaipu's energy. Bolsonaro later continued to engage in bilateral projects in the context of Itaipu.
The integration strategy, however, was mixed with a strategy to contain Paraguay and capture most of Paraguay's share of Itaipu's resources at a meager price. These elements correspond with a more dominative type of Brazilian hegemony, which hinders a precise denomination of Brazil's hydro-hegemony as a leadership type. Several interviewees point toward a lack of leadership from Brazil, especially regarding energy integration. Examples are interview quotes such as: “I do not see an actor capable of having the leadership necessary to generate more integration of energy markets [in Brazil and Paraguay]” (I1) and:
I would argue that either Brazil assumes the leadership or there is no integration. I believe that, somehow, it [the lack of integration] is Brazil's fault. It is very big in terms of power but does not obtain the leadership, and it does not offer its neighboring states possibilities to gain benefits. . . . Brazil makes little effort for integration. (I10)
For Itaipu, a comparable pattern can be observed. On the one hand, in a leadership role, Brazil has used utilitarian power to construct Itaipu, and it has granted Paraguay benefits such as the construction of smaller binational projects and revenue from electricity sales to Brazil to exploit the resources of the Paraná River fully, it is necessary to cooperate with Paraguay. Within this sense of cooperation, on the other, Brazil tried to dominate and capture a large share of Itaipu's surplus electricity at a meager price, dwarfing the costs to contain Paraguay with utilitarian and normative tactics. The mix of Brazil's leadership and dominative hydro-hegemonic behavior makes it hard to locate it at a precise point on the continuum in Figure 2 and the hydro-hegemonic framework in Figure 3. Table 1 summarizes the forms of resource control and strategies that led to them, again showing the mixed use of strategies and power sources that substantiate them. These mixed findings demonstrate the explanatory limits of the static perception of forms of hydro-hegemony.
• Framework of hydro-hegemony (adapted from Zeitoun & Warner, 2006, p. 453).
Citation: Regions and Cohesion 13, 3; 10.3167/reco.2023.130302
Overview of Brazilian and Paraguayan resource control strategies and employed power sources (authors’ elaboration).
| Form of resource control | Resource control strategies | Substantiated by power sources | Main actions |
|---|---|---|---|
| Brazil | |||
| Mix of shared and consolidated control | Integration Containment |
Utilitarian | Assuming the majority of the costs of the dam and associated infrastructural integration projects (e.g., bridges, roads) |
| Normative | Upholding the conditions in Itaipu's founding Treaty when Paraguay wished to change the conditions | ||
| Discursive hegemonic | Avoiding Paraguayan anti-Treaty discourse by entering secret negotiations at the presidential and Itaipu Binacional levels | ||
| Paraguay | |||
| Shared control, skewed towards Brazil | Resource capture | Normative | Invoking the legal doctrine that treaties can be changed when their founding circumstances change (here, an increase in electricity price) |
| Discursive hegemonic | Public campaigns to portray Paraguay as being exploited by Brazil Establishing informal relations at the presidential and Itaipu Binacional levels |
||
In the following discussion, the more dynamic concept of “consensual hegemony” will be introduced to complement the analysis and determine the type of hegemony in this case.
Discussion: Consensual hydro-hegemony
We have seen that Brazil's take on hydro-hegemony does not fit well with customary analysis of hydro-hegemonic relations. We, therefore, decided to consider Burges’ (2008) concept of Brazilian consensual hegemony (and its relative failure) as a candidate to complement Zeitoun and Warner's (2006) hydro-hegemonic framework here.
The concept of “cooperative hegemony” had already been coined in an (ideational-institutionalist) realist tradition by Pedersen (2002) as the flipside of “unilateral hegemony.” States may seek to strategically advance their power by coopting others; this will require side payments and a degree of power-sharing. Pedersen identifies three critical preconditions for adopting a strategy of cooperative hegemony: power-sharing with smaller states in a region, power aggregation on the part of the predominant regional state(s), and commitment to a long-term regionalist policy strategy. Burges (2008) added to this that a hegemony gains its strength through “consent, not the latent threat of imposition” (p. 65), in so doing bringing it closer to a neo-Gramscian hegemony. A consensual hegemon seeks to subtly transcend its interests to non-hegemons by developing a regime also favorable to other regional actors. The promise that under Brazil's aegis, Latin America as a whole would gain a better position internationally would, however, require the consent not only of other Latin American nations but also of influential internal strata, making it a two-level game. States participating in the regime move toward a shared goal created by the hegemon. The hegemony is the international regime to which all states in the region adhere as they hope to receive benefits from it. The hegemon is the state that coordinates this structure and, by doing so, steers participating states toward its preferences.
Zeitoun and Warner's (2006) altered hydro-hegemonic frame-work applied to the Itaipu case
Citation: Regions and Cohesion 13, 3; 10.3167/reco.2023.130302
Prys (2010) has argued that hegemons perceive a special mission legitimizing extraordinary actions. At the same time, however, hegemons tend not to welcome the label of the hegemon and may lack a willingness to take on hegemony. In the Brazilian context, Burges (2008) argues that Brazil is highly averse to being denominated a regional hegemon. The Brazilian Foreign Ministry realizes that Brazil cannot assume the economic and security costs of a hegemon, and it does not wish to deal with the adverse diplomatic effects, such as accusations of domination. Instead, the governments of presidents Cardoso (1995–2002) and Lula (2003–2010) maintained foreign policies that focused on common regional interests, such as democratic consolidation and the region's insertion into the world economy (Burges, 2008). Examples are the creation of the Union of South American Nations (UNASUR) as an alternative to the US-led Organization of American States (Mares & Trinkunas, 2016, p. 64), as well as the shift in Mercosur from a focus on international trade toward more socioeconomic and political issues (van Klaveren, 2018). This multilateral, regional regime established a true consensual hegemony during the Pink Tide. In that way, Brazil could steer and advance its interests within the regional security regime while the costs of creating multilateral institutions could be shared between the member states (Burges, 2008).
Burges holds that while the Cardoso and Lula governments had ambitions to become a leading global power, the Brazilian Foreign Ministry did not want Brazil to be perceived as a regional hegemon because of the high economic and diplomatic costs attached. Instead, a consensual hegemony was created in which Brazil coordinated a multilateral regime, including UNASUR and IIRSA. Brazil could steer the regime in its favor while costs were shared between the participating states. A similar dynamic can be observed in the case of the Itaipu Dam. Since Brazil does not want to be seen as a hegemon that exploits Paraguay, Lula, Dilma, and Bolsonaro all maintained discourses of friendship and cooperation. Instead of outrightly exploiting Paraguay, a shared international regime is maintained in the shape of Itaipu Binacional. Within this regime, Brazil can steer Paraguay toward its preferences, such as a high supply of electricity at a low price, because it has slightly more decision-making power, and Paraguay is highly dependent on Brazil. As in a typical consensual hegemony, the costs of the international regime are shared since Brazil earns back its investment in the shape of cheap Paraguayan electricity.
Conclusion
From 2003–2022, Brazilian hydro-hegemony displayed characteristics of a leadership style of hegemony, such as setting up international institutions and distributing benefits. Somewhat weaker signs of a more dominative style can be found, too, such as a strong containment of Paraguay. Because of these mixed indications and because of the ambiguous importance of presidential diplomacy and informal relationships, the form of Brazilian hydro-hegemony can best be analyzed by Burges’ (2008) concept of consensual hegemony, leading to consensual hydro-hegemony as a separate and yet underexplored form of hydro-hegemony. Here, the hegemony is the international regime in the shape of Itaipu Binacional, in which the hegemon, Brazil, has managed to contain Paraguay within this structure.
As noted in the introduction, the period under scrutiny ends with the end of the Bolsanaro government. However, in keeping with our insistence on a more dynamic form of analysis, it is worth mentioning that basin relations appear to be in flux again now that, after an intense election, Lula regained the Brazilian presidency on January 1, 2023. During a bilateral meeting in March 2023 between Paraguayan President Abdo and President Lula, the latter expressed the wish to revive UNASUR and Mercosur, the necessity for a leadership role for Brazilian in the region, and the willingness to renegotiate the Itaipu Treaty (Presidency of Brazil, 2023). He stated, for example, that “Brazil—as the elder brother of South American countries—is responsible for making other countries grow accordingly,” while “the new treaty will take both countries’ realities—as well as the respect Brazil has for its ally, our dear Paraguay—into account” (Presidency of Brazil, 2023). These statements resemble characteristics of a leadership type of hydro-hegemony and integrative strategies. This could grant more discursive hegemonic power sources to Paraguay and move Brazilian hydro-hegemony away from consensual hydro-hegemony toward a more ideal type of hydro-hegemony of leadership and shared control. Taking into account Malamud's (2005) concept of presidentialism, however, the opposing political backgrounds of Lula and Abdo could theoretically obscure such an outlook. While still unfolding, the pursuit of some preliminary signs of an ideal type of “leadership” hydro-hegemony with shared control can be observed in this exciting, if bewildering, new era in Brazilian–Paraguayan hydropolitics.
Acknowledgment
We thank Prof. Dr. Patricio Silva and Dr. Havar Solheim at Leiden University for their comments during the research and writing process.
Appendix
| Code | Role | Organization | Nationality | Place and date |
|---|---|---|---|---|
| I1 | Assistant Professor of International Relations | Pontificia Universidad Católica de Chile | Italian | June 25, 2020 |
| I2 | Anthropologist specialized in hydroelectric dams | Consejo Nacional de Investigaciones Científicas y Técnicas (Argentina) | Argentine | June 23, 2020 |
| I3 | Chief Executive of Energy Division | CAF – Development Bank of Latin America | Ecuadorian | August 7, 2020 |
| I4 | Technical Manager | Uruguayan Electricity Authority | Uruguayan | August 13, 2020 |
| I5 | Senior Energy Specialist | Inter-American Development Bank | Uruguayan | August 12, 2020 |
| I6 | Head of Electric Energy | Ministry of Industry, Energy and Mining (Uruguay) | Uruguayan | August 11, 2020 |
| I7 | Vice Director of Electricity Planning | Ministry of Mines and Energy (Brazil) | Brazilian | August 25, 2020 |
| I8 | Head of Operations | Entidad Binacional Yacyretá | Argentine | July 3, 2020 |
| I9 | Director of Electricity Planning | Ministry of Mines and Energy (Brazil) | Brazilian | August 25, 2020 |
| I10 | Senior Energy Specialist | Inter-American Development Bank | Brazilian | August 11, 2020 |
| I11 | Director of Public Investments | Ministry of Finance (Paraguay) | Paraguayan | August 4, 2020 |
| I12 | Policy advisor | Latin American Energy Organization (OLADE) | Argentine | July 3, 2020 |
| I13 | Policy Advisor Electricity | Ministry of Mines and Energy (Brazil) | Brazilian | August 25, 2020 |
Notes
Annex C of the Itaipu Treaty regulates the calculation of the electricity price, the terms of the debt payment, and the financing of other costs between the two countries.
Union of South American Nations
Southern Common Market
Initiative for the Integration of the Regional Infrastructure of South America
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