Can Paraguay's President Survive a Scandal?

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Jorge Saenz / AP

Paraguayan President Fernando Lugo has admitted that he had a relationship with Viviana Carrillo, 26, and that he is the father of her son Guillermo, 2, born not long after Lugo resigned as bishop of San Pedro

It's a priest-meets-girl drama that's now a President-admits–baby scandal. According to a paternity suit filed in Paraguay last week, Fernando Lugo was 48 years old when, a decade ago, he began an amorous relationship with a 16-year-old girl, Viviana Carrillo, in the impoverished San Pedro province. At the time Lugo was a Roman Catholic bishop — and Carrillo was preparing for the sacrament of confirmation. Lugo denies that the affair began when Carrillo was a minor. But she says she was "seduced by the way he talked, his pretty words, his beautiful expressions," according to the suit, "and by his promises that he would resign his position for me, that he would spend his life with me, that we would have many children together and form a household."

Lugo did eventually resign as bishop of San Pedro — but just months before leaving the priesthood, he conceived a child with Carrillo in 2006, when she was 24. (The boy, Guillermo, turns 2 next month.) A year ago Lugo was elected President of Paraguay. Now, in response to the lawsuit, Lugo has come clean about the affair. "Here and now, before people and my conscience, I declare with absolute honesty and a sense of duty and transparency," the President said on Monday, "that there was a relationship with Viviana Carrillo." He added, "I assume all responsibilities, and I recognize that I'm the father of the child." Says Claudio Kostinchok, one of the lawyers who filed the suit for Carrillo: "I think he showed that his clerical and political ambitions mattered more to him than this woman and child." (See the top 10 political sex scandals.)

This was hardly the way Lugo and most Paraguayans wanted to observe the first anniversary of his historic election. Lugo, 57, is Paraguay's Barack Obama, the outsider agent of change who pledged to lead the South American nation out of its benighted past. The leftist former priest, who had worked among Paraguay's poorest as a bishop, toppled the seemingly omnipotent Colorado Party, the political base of the country's 19th and 20th century dictators like General Alfredo Stroessner. Lugo has since pushed for essential measures like land reform. What Paraguay is getting instead, at least for the moment, is "a telenovela," says respected investigative journalist Mabel Rehnfeldt of the newspaper ABC in the capital, Asunción. Yet she predicts the scandal will not damage Lugo's presidency too badly — for reasons that reflect both Latin America's machismo and its modernization. "Many Paraguayans on the one hand will say, 'Here's a man simply demonstrating he's a man,' " says Rehnfeldt, "while others will say, 'This is the 21st century. It's a private affair.' " (See the top 10 awkward moments of 2008.)

Either way, Lugo's lawyer, Marcos Farina, tells TIME the President has now agreed to take a quarter of the roughly $30,000 government salary he already donates to an indigenous charity and redirect it to child support for Guillermo. (He also consented to the boy using the surname Lugo on his birth certificate.) Carrillo's lawyers have confirmed that she signed off on that arrangement and say they have dropped the suit. They also deny Farina's accusation that they tried to blackmail Lugo for $1 million before filing last week's paternity suit, saying the attorney and the President are trying to deflect attention away from Lugo's conduct in the case. Carrillo, now 26, has kept away from the media this week after suggesting last week that she hadn't approved of the lawsuit despite having signed it.

Nonetheless, Lugo, who has long been dogged by rumors about the affair — as well as others — finally felt compelled to come forward. "He's taking the honorable steps," says Farina. Perhaps. But Lugo's behavior leading up to his admission on Monday was reminiscent of former U.S. President Bill Clinton before he conceded his affair with Monica Lewinsky in 1998. Lugo kept even his closest aides in the dark about the truth. As late as last weekend, presidential spokesman Emilio Camacho was telling reporters that Carrillo's paternity claims "must be false." Sources close to Carrillo suggest the suit might never have been filed if Lugo had assumed a more appropriate level of child support in the past.

The Catholic Church in Paraguay, if not the Vatican, also stands to suffer scrutiny as a result of the paternity episode — especially if the claim that the sexual relationship between Lugo and Carrillo began when she was a minor is true, something the President and his lawyer adamantly deny. It's one thing for a celibate parish priest to father children and try to keep it under wraps; but when it involves a bishop, it casts a spotlight on the church hierarchy. Although the Vatican had accepted Lugo's resignation as bishop, it refused to recognize his exit from the priesthood until after he was elected President.

Lugo, meanwhile, is using his election anniversary to help make Paraguayans forget the affair. This week he moved up the start of what he calls the "relaunching" of his government to accelerate sorely needed but stalled projects like hospital and health-care reform and an offensive against Paraguay's deep-seated official and business corruption. "These are the things Paraguayans care more about him confronting at this point," says Rehnfeldt. "If he starts delivering on them, then his popularity won't take too big a hit from the paternity scandal." If he doesn't, however, Paraguayans might make Lugo pay not just for his failed promises as President, but also for his broken vows as a priest.

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