First the computers will crash, bringing down the electrical grid, the water system and the telephone network. Then, nearly 200,000 government workers will discover the state-run bank that prints their paychecks has been crippled by technological glitches. Finally, a day or two later, crowds will riot and loot, forcing the government to declare martial law.
To Walter Schafer Paoli, the Paraguayan government's year 2000 generalissimo, this is no science-fiction plot. Such bedlam, he says, is quite possible during the first days of January in this poor, landlocked South American country sandwiched between Argentina and Brazil.
His manifest fear stems from a simple, alarming fact: The government has been woefully late in tackling the Y2K computer glitch. Most government agencies here only recently began the often-protracted chore of fixing their systems.
And to make matters worse, members of a presidential commission set up in the spring to coordinate the repair efforts quit en masse last month, complaining that they were never given offices, a budget or payment for their services.
Paraguay is just one of many developing countries that have been tardy in dealing with the Y2K bug. From sub-Saharan Africa to Central America, Eastern Europe and Southeast Asia, many nations have only just started to vigorously address the glitch, raising the possibility of disruptions in basic services.
Although the impact likely will be cushioned by the fact that such nations still have legions of people in rural areas whose lives remain untouched by electronics, failing to squash the bug in time could affect millions of others who live in cities where computer systems control power distribution, telephones and other crucial government operations.
"Developing countries have a lot left to do to immunize themselves from the Y2K bug," said Bruce McConnell, director of the International Y2K Cooperation Center, a U.N.-sponsored organization that is working with 170 nations on the glitch.
Among the laggards, though, Paraguay is particularly far behind, according to some analysts. "Paraguay is an outlier," said a high-level technology specialist at an international agency in Washington. "It is definitely one of the worst cases."
Too Little, Too Late
,3 With the new year less than three months away, business and government leaders here worry that even with a newfound commitment to eradicating the millennium bug, there is not enough time left to make the necessary patches.
"It will not be possible for us to fix everything before January," said Schafer, a former computer magazine publisher who was tapped three weeks ago to replace the disbanded commission. "We need to prepare for problems throughout the country -- with the telephones, electricity, water and other services our government provides."
Given that assessment, most foreign corporations and governments aren't counting on anything come January.
Inside one of Citibank's buildings in Asuncion, workers are installing a room-sized cistern that can hold enough water to keep sinks running and toilets flushing for two weeks. The firm's branch offices are being equipped with cellular and satellite phones as well as electrical generators, which will be refueled by a fleet of oil trucks hired by the bank.
The local office of DHL Worldwide Express has ordered fold-out cots in case the courier service's employees are unable to travel to and from work by public transportation. A local bank has set up an elaborate plan to deal with a falla total -- a total failure of electricity, telephones and water. Even the U.S. Embassy is girding for the worst, increasing its stockpile of MREs, those tear-open, ready-to-eat meals originally made for soldiers.
"We're not planning to take anything for granted," said Rafael Schvartzman, who runs DHL's operations here.
Because Paraguay exports only a few products outside Latin America -- largely textiles, cattle and soybeans -- Y2K problems here likely will not have a direct or immediate economic effect on the United States. But some diplomats here worry that glitch-related chaos could spill across Paraguay's borders, destabilizing the nation's fragile relations with Brazil and Argentina.
In its final act before disbanding, the Y2K commission sent a confidential report to the United Nations saying that the government was only 20 percent along with its repairs and that, given the current pace, it would not be finished until March. Schafer recently revised that progress report downward, pegging the government at 15 percent readiness and at a "high risk" of failure.
Of particular concern to him is the computer system used by the National Police to process crime reports, track national identity cards and communicate with Interpol. The police only recently discovered that the system needs new hardware and software to operate properly in the new year, but the manufacturer, International Business Machines Corp., said it will take three months just to get the necessary equipment to Paraguay, Schafer said. "It will be impossible to fix this in time," he predicted in an interview last week.
Another worry for many here is the state-owned bank that prints paychecks for the 196,000 government workers and provides loans to thousands of small businesses. The bank needs to repair and test 7 million lines of programming code, a task that specialists say will be difficult to complete before January. "It is impossible," Schafer stated matter-of-factly, raising his hands in resignation.
At the government-run telephone company, 16 of 24 switching centers -- buildings with stacks of computers and mazes of wiring that route calls -- have not yet been upgraded for Y2K. Installing new software in the centers will not be completed until late November, leaving a scant four or five weeks to test for problems.
As a consequence, Schafer said, it makes sense to plan for martial law. "If we do not have electric power, it will be impossible to give water to the citizens," he said. "Now imagine if the telephone is down too. This scenario is possible. And if that happens, what is your alternative? Martial law. There is no other choice."
Then, he paused and leaned across the table. "This," he whispered, "is a catastrophe."
Taking A Back Seat How did Paraguay get into this mess?
The answer, say people here, is a confluence of woes that have long plagued this and other Third World countries: political turmoil, economic collapse, corruption and a general lack of technological awareness.
The country's former president, Raul Cubas, last year budgeted a paltry $500,000 for the government to address the glitch, which stems from the fact that some computers, as well as microchips in many electronic devices, were programmed to recognize only the last two digits of a year, assuming that the first two would be 1 and 9. On Jan. 1, unprepared machines will understand the year "00" not as 2000 but as 1900, potentially causing them to shut down or stop working properly.
Cubas decreed that government agencies should test their computer systems for Y2K problems and deliver a status report to the finance minister. But with no central coordination, only a handful ever followed through.
By early this year, what little energy was being devoted to the issue quickly took a back seat to a more immediate crisis. In March, Cubas was forced to resign and flee to Brazil after his political mentor, a former general, allegedly ordered the assassination of his vice president and the shooting of dozens of student protesters.
Two months later, the new president, Luis Gonzalez Macchi, formed the Y2K commission and ordered it to resume the repair effort. The group surveyed the situation and, a few months later, announced that it would need $17 million to pay for the fixes.
Getting that much money proved impossible in Paraguay, a largely agricultural country of 5.4 million people that has been racked by a severe recession for the past two years. The government, with an overall annual budget of only $1.2 billion, didn't have the means to write a lump-sum check. Bureaucrats in each agency did not want to cede authority for their computers to a commission. And critics questioned whether some of the group's members, who have computer consulting businesses, were trying to steer the funds to their firms.
"They wanted too much power," said Cesar A. Ferreira, president of Performance Global Systems, a computer firm that works directly with several government agencies. "They wanted to control the purchase of every computer."
Commission members contend that they were not power hungry or thirsty to micromanage, just convinced that central coordination was needed to speed up the repair work. But after five months without a budget or office space, the frustrated members sent off their report to the United Nations and quit in September.
Left to pick up the pieces was Schafer, the group's technical coordinator. A reserved middle-aged man who favors dark suits and wears the same gold-colored Y2K lapel pin as White House year 2000 czar John Koskinen, Schafer now finds himself working 16-hour days, seven days a week.
But he still hasn't been given an official government office or car. He works out of his old computer magazine digs, a converted kitchen with broken floor tiles, peeling plaster and mismatched furniture. He shuttles himself around the crowded streets of Asuncion in a battered, early-1980s Honda Civic.
His Y2K strategy is straightforward: There is not enough time to finish the needed fixes, so the government instead should devote its energies to developing comprehensive contingency plans for malfunctioning computers.
"It's too late," he said. "The best thing we can do now is to be fully prepared for failures."
What's To Go Wrong?
At the National Electric Administration, chief information officer Francisco Santacruz bristled at suggestions that there will be power outages in the new year.
Swiveling his computer monitor toward a reporter, he scrolled through the utility's latest status report. The giant Itiapu hydroelectric plant, which supplies three-quarters of Paraguay's electricity, is more than 90 percent complete with its repair work, he said.
The old billing system has been replaced with one that is fully Y2K ready. And, he added, 95 percent of the equipment used to distribute electricity is devoid of microchips; the other 5 percent has been certified as glitch-free by the manufacturers.
"If people say there will be no electricity, they don't know what they are talking about," Santacruz growled. "We have very little automation."
Schafer said he doesn't believe the electric company's sanguine predictions. He argues that the utility needs to test all its systems itself, not rely on the assurances of manufacturers.
Skeptics of Schafer's assessments contend that the millennium bug won't sting Paraguay all that severely because many tasks that are computerized in other parts of the world are still done by hand here. The country's social security system, for example, still uses ledger books and index cards to track information.
"This is not the United States," Ferreira said. "We don't have computers everywhere."
Others, however, maintain that businesses and government agencies in Paraguay, through foreign grants and loans, have been able to buy and grow reliant on plenty of computers, a fact borne out by a walk through an Asuncion shopping center. More than half the stores at the trendy Del Sol mall use PCs to ring up sales. And in most cases, store managers said their machines have not been repaired.
"There are some here who believe that they will not be as affected as more technologically developed countries," DHL's Schvartzman said. "The truth is that there is a lot of dependence on technology here. They just aren't aware of it."