The Itaipu Hydroelectric Dam on the Parana River, whose renewable electricity will power a new US-backed AI data centre project in Paraguay. Photo: Gabriel Resendev via Wikimedia Commons, CC BY-SA 4.0.
ASUNCION, Paraguay — The United States and Paraguay have signed new agreements covering artificial intelligence data centres, border security and civil nuclear cooperation, the U.S. Department of State announced on Wednesday, October 21, 2026, in a fact sheet issued during Deputy Secretary of State Christopher Landau's visit to the Paraguayan capital.
The headline deal is a strategic partnership between Crusoe, an American artificial intelligence infrastructure company, and Araico, a Paraguayan energy and infrastructure developer, to build high-performance computing facilities powered by the Itaipu Hydroelectric Dam, one of the largest fully renewable hydropower sources in the world. Crusoe plans to bring an initial deployment online in mid-2027 to serve cloud customers in the United States and Latin America. The State Department described the project as potentially one of the largest private investments in Paraguay's history.
What did the US and Paraguay announce on October 21?
The fact sheet groups the announcements into four areas: trade and investment, regional security, the fight against transnational crime and illicit finance, and civil nuclear cooperation. Landau led a trade delegation to Asuncion from October 19 to 21 focused on technology, critical minerals, riverine infrastructure and logistics, and met President Santiago Pena and Foreign Minister Ruben Ramirez.
On the investment side, uranium producer Uranium Energy Corp announced a $12 million investment to develop one of its uranium concessions in Paraguay. The State Department framed growing U.S. investment as offering Paraguay a trusted, transparent alternative to predatory financing from strategic competitors, an implicit reference to China's expanding economic footprint in South America.
Why is the Itaipu dam central to the AI data centre plan?
The 14,000-megawatt Itaipu dam, which Paraguay operates jointly with Brazil on the Parana River, produces some of the cheapest and cleanest electricity in the world. That combination is exactly what developers of power-hungry AI data centres are hunting for as they compete for grid capacity in the United States and Europe. Powering computing halls with existing hydropower lets the partners add capacity without waiting years for new power plants or grid connections.
Reporting on the partnership, including by Latin Times and The Rio Times, has noted that it fits President Pena's push to convert Paraguay's electricity surplus into an AI industry, with the Yguazu area in Alto Parana emerging as a hub for large-scale data centre projects. Industry Minister Marco Riquelme travelled to Silicon Valley this year as Paraguay courted American technology investors.
What security commitments did the US make to Paraguay?
Landau and Foreign Minister Ramirez signed an Aerial Intercept Assistance Agreement, which will enter into force through a later exchange of diplomatic notes. Once active, it is designed to strengthen Paraguay's capacity to monitor and protect its airspace against suspected narcotrafficking flights. The State Department also announced $$ in foreign assistance for counterterrorism, border security and digital evidence capabilities, including support to operationalise a new counterterrorism centre, and said it will deploy a counterterrorism advisor to Asuncion, the first such posting for the department's Counterterrorism bureau in the region.
The two governments also signed a memorandum of intent to deploy PISCES, the U.S. Personal Identification Secure Comparison and Evaluation System, a border management and passenger screening platform, to Paraguay. Separately, the State Department is providing $.25 million in bilateral security assistance to counter transnational organised crime, and will open an office of the Bureau of International Narcotics and Law Enforcement Affairs in Asuncion for the first time, serving as a regional hub for the Southern Cone.
What does the nuclear agreement mean for Paraguay?
The United States and Paraguay announced the start of negotiations toward an agreement for cooperation in the peaceful uses of nuclear energy, known in Washington as a 123 Agreement after Section 123 of the U.S. Atomic Energy Act. Once concluded and in force, such a pact establishes the legal framework for civil nuclear trade between the two countries, covering items such as reactor technology, fuel and equipment. For Paraguay, which currently generates nearly all of its electricity from hydropower, the talks signal a possible diversification of its energy mix.
What can Nigeria learn from the US-Paraguay data centre deal?
For Nigerian readers, the Paraguay announcement is a case study in how a country with abundant, reliable electricity can attract billions of dollars in AI infrastructure investment. Nigeria's data centre market, anchored by operators in Lagos, has been constrained by unstable grid power and high diesel costs, pushing operators toward self-generation. Paraguay's pitch to Crusoe and Araico was the opposite: a 14,000-megawatt shared dam producing surplus clean power. The lesson is that cheap, dependable electricity and clear terms for foreign investors are becoming the decisive factors in where the world's AI factories are built.
Frequently asked questions
Who is Crusoe?
Crusoe is an American artificial intelligence infrastructure company that builds and operates AI-optimised data centres, known for siting them next to abundant energy sources.
When will the Paraguay AI data centre come online?
Crusoe plans to bring an initial deployment online in mid-2027, according to the State Department.
How much security assistance is the US giving Paraguay?
The State Department announced undefined.5 million for counterterrorism, border security and digital evidence programmes and $.25 million to counter transnational organised crime, a combined $1.75 million.
What is a 123 Agreement?
A 123 Agreement is a pact under Section 123 of the U.S. Atomic Energy Act that sets the legal terms for peaceful civil nuclear cooperation between the United States and another country.
This report was compiled from the U.S. Department of State fact sheet "U.S.-Paraguay Cooperation to Advance Prosperity and Security" (October 21, 2026), together with reporting by Mirage News on the Landau visit and coverage by Latin Times and The Rio Times of the Crusoe-Araico partnership and U.S.-Paraguay security cooperation.
The Asuncion visit continues a busy stretch of U.S. diplomacy under Secretary of State Marco Rubio, who this week told reporters in Mumbai that Ukraine's access to Starlink remains a decision for Elon Musk, not the White House. Read our report on Rubio's Starlink comments for more.
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