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Central and South American leaders from L-R: Nicaragua's President Daniel Ortega, Venezuela's President Hugo Chavez and Ecuador's President Rafael Correa - Source: Reuters -
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Paraguay rejected a military cooperation agreement with the United States amid a growing diplomatic rift in South America over the presence of US troops in the region.
Paraguay's socialist President Fernando Lugo said his government decided to halt a series of exercises between the Paraguayan and US militaries. Similar programs have been carried out in the country in recent years.
"There would be about 500 US military and other personnel in the country and that wouldn't go unnoticed," Lugo told reporters at a news conference.
"It's neither prudent nor convenient at this time and could raise concerns among the other members of the Mercosur and Unasur," he said, referring to South America's trade bloc and political group of regional leaders.
The decision comes as South American countries step up arms purchases and are divided over a U.S plan to relocate its hub for anti-narcotics operations in Latin America to Colombia, which would host US troops in seven military bases.
Arms buildup is picking up in South America, where earlier this month Venezuela announced it secured over $2 billion in credit from Russia to fund the purchase of 92 tanks and an advanced S-300 missile defense system.
Brazil is planning a similar deal with France, while Ecuador and Chile recently beefed up their air forces with new equipment. Bolivia is planning to buy new combat planes and helicopters from France and Russia.
"We regret the decision but we respect it," Liliana Ayalde, the US Ambassador to Asuncion told a local radio station.
Ayalde said the military program aims to provide medical and dental health services to impoverished communities as well as training to Paraguay's military.
A similar program implemented during Paraguay's previous administration faced harsh criticism in the region, raising concerns about a possible US military base being established in the country.
Still, Paraguay officials denied Thursday's announcement could raise tensions with the United States.
"We have an excellent bilateral agenda with the United States, with more than 30 agreements currently in place," said Hector Lacognate, the country's foreign minister.
