Paraguay declared independence in 1811 - which Spain did not oppose - and within a few years it was under the thumb of the xenophobic Jose Gaspar Rodriguez de Francia, also known as 'El Supremo.' He sealed the country's borders, promoted a policy of self-sufficiency (even forcing the Spanish upper class to intermarry with the mestizo) and expropriated the properties of landowners, merchants and the Church. He died in 1840 and his remains were later disinterred and flung into a river. Francia's successor, Carlos Antonio Lopez, ended Paraguay's isolation and began modernization. Unfortunately, he also spawned a megalomaniacal son who set about destroying the country by starting the catastrophic War of the Triple Alliance (1864-70) against Argentina, Uruguay and Brazil. When the smoke had settled, Paraguay had lost over 150,000 sq km (58,500 sq mi) of territory and almost a quarter of its population, including Lopez junior.

After the war, Paraguay's agricultural sector was resuscitated by a new wave of European and Argentine immigrants, but political instability continued. At the turn of the century, cross-border tensions arose after Bolivia occupied disputed parts of the Chaco. The prospect of vast deposits of oil in the region (which proved non-existent) catapulted the two countries into war in 1932. The Bolivian army was pushed out of most of the Chaco and a subsequent treaty awarded Paraguay three-quarters of the territory.

Paraguayan politics became even more turbulent following the Chaco War, until a brief civil war brought the Colorado Party to power in 1949. A military coup in 1954 saw General Alfredo Stroessner installed as president. A firebrand temper, Stroessner employed torture, murder, political purges and bogus elections to remain in power for the next 35 years. The dictator was overthrown in 1989 and was replaced by another brass hat, General Andris Rodriguez. Despite considerable skepticism about his intentions - Rodriguez was Stroessner's former right-hand man - the country's perennial state of emergency was cancelled, censorship was eliminated, opposition parties were legalized and political prisoners released.

Paraguay enjoyed increasing political stability until the 1993 election of Juan Carlos Wasmosy, a free-market and former member of Stroessner's faction, whose presidency inspired a disturbing number of nationwide strikes. Wasmosy came under scrutiny for shady business dealings associated with Paraguay's hydroelectric projects.

In May 1998, the Colorado Party reconfirmed its staying power with the election of President Raul Cubas, an electrical engineer who assumed the party's candidacy after former army General Lino Oviedo, their original nominee, was imprisoned mid-campaign on charges of rebelling against Wasmosy in 1996. Just when things again began to look rosy, Cubas too came under fire, accused of abusing his powers by freeing Oviedo from prison despite Supreme Court orders to keep him there. When the Vice President was gunned down by assassins in March 1999, popular sentiment linked Cubas and Oviedo to the murder and Cubas was forced to resign from office. Luis Gonzalez Macchi, who had been president of the Senate, was sworn in, while Cubas and Oviedo sought asylum in neighboring countries.