For more than a century, Paraguay has been an isolationist country. In the 1990s, however, it has slowly and cautiously emerged from its national cocoon and become part of the international community. The recent political turmoil, however, has threatened Paraguay's transformation. Brazil's president, Fernando Henrique Cardoso, warned that Paraguay must resolve its internal civil strife and restore its democratic credentials if it wants to remain part of the international community and, in particular, retain its trading relationships as a member of Mercosur. Moreover, Paraguay has had troubled relations with the United States and was decertified in February 1999 because of its participation in smuggling, money laundering, and international drug trafficking.
The USAID supported a variety of programs to strengthen Paraguay's democratic institutions in the areas of civil society, local government and decentralization, and national reform of the state. Other important areas of intervention are the environment and reproductive health. Current plans call for the development of new activities supporting economic growth. The total amount of the program was $12 million (in fiscal year 2001).
Paraguay is a member of the United Nations (UN), the Organization of American States (OAS), the Latin American Integration Association (ALADI), and the Rio Group.