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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...

Author: /time Magazine | Title: Can Paraguay's President Survive a Scandal? | 4/15/2009 | See Source »

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...

Author: /time Magazine | Title: Can Paraguay's President Survive a Scandal? | 4/15/2009 | See Source »

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...

Author: /time Magazine | Title: Can Paraguay's President Survive a Scandal? | 4/15/2009 | See Source »

...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...

Author: /time Magazine | Title: Can Paraguay's President Survive a Scandal? | 4/15/2009 | See Source »

...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...

Author: /time Magazine | Title: Can Paraguay's President Survive a Scandal? | 4/15/2009 | See Source »

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