The War of the Triple Alliance

The only reason Paraguay survives at all as a nation is that Brazil and Argentina are big rivals. They kind of like maintain a rump state there just because it's not worth dealing with the conflict over who gets to have it. And they draw up a democratic constitution that basically existed as an excuse for these people to sell off all of the state's land and businesses for their own personal profit. The British banking firm bearings brothers were involved in this too.