Although national politics and policies strongly influence how cooperatives function, cooperative organizations and advisors increasingly envision cooperatives as primarily economic organizations and avoid direct political engagement and social mobilization. In this paper, we discuss and challenge the depoliticization of cooperatives based on research into how two Paraguayan cooperatives dealt with the aftermath of a debt forgiveness law for small farmers. The law was a major victory for peasant political organizations, but its benefits did not extend to all smallholders, generating discontent that threatened both cooperatives and their development strategies. The cooperatives' differing responses to these challenges underscore how policy effects and development strategies are shaped by local level decision making based on organizational histories and emergent opportunities. To conclude, we discuss the advantages and challenges of politicizing cooperatives and offer reflections on how these challenges might be overcome.

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