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La Paz
In May 1931, a full-fledged war broke out between Paraguay and Bolivia over an area known as the "Gran Chaco". The Bolivians attacked Paraguay but were repelled suffering heavy losses. A truce was finally arranged in 1935. In 1938, a settlement was negotiated giving Paraguay most of the disputed territory.
Background
The Chaco Boreal, lying between Paraguay and Bolivia, was largely uninhabited and was considered by both countries to be strategically and economically valuable. Bolivia hoped to capture the region to access the Paraguay River, providing an outlet to the Atlantic Ocean. Both countries also believed that the Chaco would be rich in petroleum, fueled by speculation and interest from foreign oil companies, including Standard Oil, which operated in Bolivia, and Royal Dutch Shell, which had interests closer to Paraguay.
Outbreak of the War
The war officially broke out in 1932. Bolivia initiated the conflict because it was geographically disadvantaged due to its landlocked status and motivated by a desire to secure a river outlet and alleged oil reserves. Paraguay, which had better knowledge of the terrain and superior preparation for the harsh conditions of the Chaco, was determined to defend its territory.
Despite having a more significant military and resources, the Bolivian forces suffered from poor leadership, logistics, and a lack of acclimatization to the harsh Chaco environment. On the other hand, the Paraguayans conducted a highly motivated and well-organized defense and later counterattacks. The war was marked by large-scale battles, trench warfare, and high casualties due to combat, disease, and dehydration.
Truce and Peace Treaty
The war drained both countries economically and led to significant loss of life. 1935, Bolivia was politically and militarily exhausted, leading to a ceasefire. A truce was arranged in 1935, and peace negotiations were held with mediation from the League of Nations. 1938, the Treaty of Peace and Friendship was signed, awarding Paraguay control of about three-quarters of the Chaco region.
Aftermath
The Chaco War had profound implications for both nations:
Paraguay: Emerged with more territory but at a significant cost. The war fostered a sense of national unity and pride and strained the country economically.
Bolivia: The defeat led to significant internal political turmoil, including military coups and a reconsideration of its military and economic strategies. The loss intensified Bolivia's landlocked status issues.