In 1973 the Yacyreta Treaty, signed by Argentine President Peron and the Paraguayan dictator Stroessner, envisaged the construction of the Yacyreta dam along the Parana River, on the border between the two countries. The dam would flood 100,000 ha of land and displace many communities, including the indigenous Mbya Guarani people, whose territory would be completely submerged. Residents opposing the dam construction protested against the loss of their property and land rights. Despite this opposition the dam began construction in 1979, but the floodgates were closed and the dam was filled for the first time in 1994, provoking the evacuation of another 20,000 local residents. The survivors still demand compensation they never received from the forced displacement. The project was originally budgeted at $2.5 billion, during the period of military dictatorships in Argentina and Paraguay. The project’s total cost has now exceeded $15 billion. During his presidential campaign, Argentina’s Carlos Menem called Yacyretá "a monument to corruption." As International Rivers denounces, "despite well–documented allegations implicating engineering and construction companies and politicians in siphoning off public funds in the building of Yacyretá, no one has ever been brought to justice.”
In 2003, the Heads of State of Argentina and Paraguay jointly decided to finish the mega-infrastructure whose work were done by 2011. Before February 2011 the water level was 76 m (249 ft) above sea level, around 7 m (23 ft) less than planned. This meant that the hydroelectric section of the dam operated at only 60 percent of its capacity. In 2010 and again in 2014 environmental organizations, such as the Union Ambientalistas de Corrientes (Unamco), warned through social medias about the risk for the dam to collapse due to important cracks on it. The authority in charge of the dam, the EBY (Entidad Biacional de Yacyreta), denied twice the warnings. According to the engineer Roberto Rios, environmentalist leader from Unamco, the authorities are ignoring the frightening fact that the cracks on the dam are indeed multiplying.
Current plans to increase the height of the reservoir would put another 80,000 people in danger of being flooded out, and even studies by two international finance institutions like the WB and the IADB prove there is poor capacity to cope with that.