Additionally, over time the relations between the Europeans and the local people varied depending on who was in power and what his personal relations were with the local people. Additionally, as more and more settlers arrived less married the locals, hurting the relationship between the groups. This was especially true among the Guarani people who didn't live in or near Spanish settlements. In many cases, the relations were so poor the Spanish used the local people to work the fields. Many of these landowners essentially enslaved the indigenous people and, while settling the lands, often times encroached on indigenous lands. So while the relations were generally good, there were conflicts and those conflicts always escalated with more aggressive Spanish governors.
Despite the conflicts, from the 1500s into the 1700s relations were generally peaceful as the Spanish slowly took over local cultures, but often in cooperation with the locals. These people also adopted the Spanish language and as missionaries arrived they often converted the people to Catholicism. For those who converted, which was most of the population, they were often given great rights and often avoided slavery.
From the 1500s into the 1700s the Jesuit missionaries dominated the region and even the government and economy. As the region had little economic value to Spain, the land was left alone and the Jesuits came to control nearly every aspect of the culture and society. Over time the Jesuits took a more active role in politics and gained many local Spanish enemies. They began to convert people at any expense, even killing those who refused to convert, and many of the people living in the region began to view them as more of a detriment than a blessing. By the early 1700s most of the people began to protest their rule and Spain conceded in 1767 when the Jesuits were removed from power.
Despite the hostile end to the rule, the Jesuits successfully converted nearly the entire region to Catholicism and with this came great cultural changes. Spanish became the de facto language of communication and Spanish culture dominated the region as the economy shifted to a base of agriculture and trade, not unlike that of Spain at the time. The enslavement of the Guarani people also nearly ended as the Spanish were hesitant to enslave Catholics, with whom they had good relations.
Due to the protests against the Jesuits, who were given power by Spain, and the seemingly complete lack of interest in the colony from Spain, the people had little loyalty to Madrid. The people were divided between the Jesuits, the indigenous people, the wealthy Spanish, and the mestizos. The politics in the region also proved that the region meant little to Spain as they primarily sought to control the lands to prevent Portuguese expansion as the people living here fell further and further into poverty.
Also in the 1700s slavery in Paraguay increased dramatically. While some of the indigenous people were still enslaved, during this time there was a significant increase in the number of African slaves. These slaves primarily worked on the cattle ranches and farms and hence brought more diversity to the country. Although slavery vastly increased in relative numbers, the slave population in Paraguay was still small in comparison to many other South American nations at the time.
In Europe, Spain fell to France in 1808 with the Napoleonic Wars and most of Spain's American colonies quickly sought independence. Paraguay declared independence in 1811 while they were on the verge of war with Argentina, with whom they had a long standing rivalry and with whom they were united under Spanish rule. Paraguay turned to Jose Gaspar Rodriguez de Francia to rule the country and to lead them forward to independence from Argentina, which he did, but he did so essentially as a dictator from 1814 until 1840.
Francia, like many other people in Paraguay, was part Spanish and part indigenous and it was the indigenous people and the poorer population that he truly represented. He protected the poor and lower classes so strongly that he forced Europeans to marry non-Europeans and removed many rights from everyone to guarantee his control. He also sought to control the country to such a vast degree that he cut off trade and didn't allow anyone to leave the country.
Francia also targeted the wealthy and the church, eventually creating a state focused on justice, although only on justice based on Francia's definition. Through this process he forever changed the culture as ethnic Europeans became concerned due to this radical fight against the wealthy. Perhaps more than any other country in the Americas, Paraguay's culture became tied to the indigenous culture and historic lifestyle as religion and education were discouraged. Francia also magnified this growing culture, its diversity, and its lack of wealth as a part of the people's identity. Paraguay was very different from its neighbors in nearly every way and this time made those differences more pronounced.
After Francia's death in 1840 and a little chaos that followed, a second dictatorship began, this time under the leadership of Carlos Antonio Lopez, and later under his son, Solano Lopez, who ruled until 1870. Under their rules and throughout the latter half of the 1800s, the country began a modernization campaign that encouraged education and healthcare, while improving infrastructure and communication. During this time slavery also ended slowly and the economy was opened to the world.
The younger Lopez also tried to make Paraguay a military power by starting ill-advised wars with both Argentina and Brazil. However, he also somewhat successfully held off these powers and remains a national hero in the country today.
After Solano Lopez's death in 1870 the country fell into chaos. The economy was a mess, many people had died in earlier wars, and the country had lost lands to both Argentina and Brazil. Despite having the opportunity to take more lands, neither Argentina nor Brazil made an attempt to take over the country due to its disastrous economic state. Instead these foreign powers got involved in Paraguay through domestic politics by supporting local politicians and parties.
In the late 1800s numerous political parties arose as the people finally had some say in the government. However, it was clear the people had a strong distrust for foreigners and foreign ideas as many people still supported the idea of a dictatorship as they viewed that as protection from the foreign enemies. Especially considering many of these new political parties were being supported by foreign governments, most notably by Brazil and Argentina. It seems the people preferred stability over freedom, but the dynamic was changing and the political parties were well on their way to taking power.
In 1904 the fairly stable government fell as conflict and later, civil war broke out. The people were divided and this cost the country more lands and money as their economy continued to struggle and their neighbors again picked at the country's borders. This led to war with Bolivia in 1932 as Bolivia sought lands in the Gran Chaco. Despite victory, political stability was far from assured for Paraguay.
Internal disputes finally ended in the 1940s with the outbreak of World War II. The United States sought Paraguay as an ally since Argentina had an alliance with Germany prior to the war. This led to financial assistance, as well as a market for their export goods. Despite this, Paraguay listened to the Germans and readily accepted assistance and favors from them as well, never actually taking a side in the war until German defeat was guaranteed.
Despite the brief economic and political boost, the country fell back into war in the late 1940s. This political fighting led to a number of leaders and governments taking power in quick succession as the economic state was instable. This state began to end in the 1960s and 1970s when Paraguay became more active on the international stage. They gained strong allies in the United States (partially due to their anti-communist stances) and Brazil as Brazil even offered them duty-free ports on the Atlantic Ocean.
The people changed in much the same way the government did as xenophobia (fear of foreigners) has subsided in the past century and the people began to gain greater levels of education. This increased knowledge also helped the people fight corruption and dictatorial actions within their government, leading to another government overthrow in 1989.
Since this time the government has somewhat stabilized, although political upheavals and changes are still a regular occurrence in Paraguay. The people still seem to be seeking out an identity and future as they remain very distinct in South America and especially in comparison to their neighbors of Argentina and Brazil.