Editing History of Paraguay (section)

==Chaco War==
{{Main|Chaco War}}
Paraguay's dispute with Bolivia over the Chaco, brewing for decades, finally derailed the Liberals. Wars and poor diplomacy had prevented the settling of boundaries between the two countries. Although Paraguay had held the Chaco, the country did little to develop the area. Aside from scattered [[Mennonite]] colonies and nomadic Indian tribes, few people lived there. Bolivia's claim to the Chaco became more urgent after it lost its sea coast (the [[Atacama]] region) to Chile during the 1879–84 [[War of the Pacific]]. Left without any outlet to the sea, Bolivia wanted to absorb the Chaco and expand its territory up to the Paraguay river in order to gain a river port. In addition, oil had been discovered there by [[Standard Oil]] in the 1920s, and people wondered whether an immense pool of oil was lying beneath the entire area.

While Paraguayans were busy fighting among themselves during the 1920s, Bolivians established a series of forts in the Paraguayan Chaco. In addition, they bought armaments from [[Germany]] and hired German military officers to train and lead their forces. Frustration in Paraguay with Liberal inaction boiled over in 1928 when the Bolivian army established a fort on the Paraguay river called Fortín Vanguardia. In December of that year, Paraguayan major (later colonel) Rafael Franco led a surprise attack on the fort, and succeeded in destroying it. The routed Bolivians responded quickly by seizing two Paraguayan forts. Both sides mobilized but the Liberal government felt unprepared for war so it agreed to the humiliating condition of rebuilding Fortín Vanguardia for the Bolivians. The Liberal government also provoked criticism when it forced Franco, by then a national hero, to retire from the army.

As diplomats from Argentina, the United States, and the [[League of Nations]] conducted fruitless "reconciliation" talks, Colonel José Félix Estigarribia, Paraguay's deputy army commander, ordered his troops into action against Bolivian positions early in 1931. Meanwhile, nationalist agitation led by the National Independent League (''Liga Nacional Independiente'') increased. Formed in 1928 by a group of intellectuals, the League sought a new era in national life that would witness a great political and social rebirth. Its adherents advocated a "new democracy" that, they hoped, would sweep the country free of petty partisan interests and foreign encroachments. An amalgam of diverse ideologies and interests, the League reflected a genuine popular wish for social change. When government troops fired on a mob of League students demonstrating in front of the Government Palace in October 1931, the Liberal administration of President [[José Guggiari]] lost what little legitimacy it retained. The students and soldiers of the rising "New Paraguay" movement (which wanted to sweep away corrupt party politics and introduce nationalist and socialist reforms) would thereafter always see the Liberals as morally [[bankrupt]].{{citation needed|date=July 2016}}

[[File:Mapa de la Guerra del Chaco es.svg|thumbnail|right|Chaco war map]]
[[File:Paraguayos en alihuatá.jpg|thumbnail|right|Paraguayan soldiers in Chaco]]
When war finally broke out officially in July 1932, the Bolivians were confident of a rapid victory. Their country was richer and more populous than Paraguay, and their armed forces were larger, had a superior officer corps, and were well-trained and well-equipped. The highly motivated Paraguayans knew the geography of the Chaco better than the Bolivians and easily [[Infiltration tactics|infiltrated]] Bolivian lines, surrounded outposts, and captured supplies. Long supply lines, poor roads, and weak logistics hindered the Bolivian campaign. The Paraguayans proved more united than the Bolivians, at least initially, as President [[Eusebio Ayala]] and Colonel (later Marshal) Estigarribia worked well together.

After the December 1933 Paraguayan victory at [[Campo Via]], Bolivia seemed on the verge of surrender. At that moment, however, President Ayala agreed to a truce. His decision was greeted with derision in Asunción. Instead of ending the war with a swift victory that might have boosted their political prospects, the Liberals signed a truce that seemed to allow the Bolivians to regroup. The war continued until July 1935. Although the Liberals had successfully led Paraguay's occupation of nearly all the disputed territory and had won the war when the last truce went into effect, they were finished politically. In many ways, the Chaco War acted as a catalyst to unite the political opposition with workers and peasants, who furnished the raw materials for a [[social revolution]]. The government offended the army rank-and-file by refusing to fund pensions for disabled war veterans in 1936 while awarding 1,500 gold pesos a year to Estigarribia. Colonel Franco, back on active duty since 1932, became the focus of the nationalist rebels inside and outside the army. The final spark to rebellion came when Franco was exiled for criticizing Ayala. On 17 February 1936, units of the army descended on the Presidential Palace and forced Ayala to resign, ending thirty-two years of Liberal rule.