BY CHRISTINA HOAG
 Special to The Herald

 CARAGUATAY, Paraguay -- Paraguayans need visas to travel to the United
 States but generally don't have too much trouble obtaining one -- unless they
 come from the town of Caraguatay.

 The U.S. Embassy automatically gives applications from residents of this sleepy
 farming community a red flag, and turns them down more often than not. The
 reason? More than half of the residents of Caraguatay have become illegal
 immigrants in the United States over the past two decades.

 ``Illegal immigration from Paraguay is not a dramatic problem,'' said Jim
 Dickmyer, embassy spokesman in Asuncion, the Paraguayan capital. ``But it's
 very difficult for a person from Caraguatay to overcome the suspicion that he is
 going to overstay his visa, given the fact that so many of them have.''

 Caraguatayans' penchant for heading north has earned the town, located about 60
 miles east of Asuncion amid cattle-grazing plains, the moniker Yanquilandia and
 national fame that it is awash in dollars because of the cash the immigrants send
 home. The yellow-and-black logo of the town's Western Union office stands out in
 sharp contrast to the quaint Spanish colonial style whitewashed buildings with
 red-tiled roofs.

 Over the years, expatriates have sent tens of thousands of dollars for items like a
 new roof and pews for the church, restoration of a deteriorated chapel and
 construction of a new playing field after holding fund-raising events at places like
 the Caraguatay Social Center in Brooklyn, N.Y., where many have settled.

 ``We live better here than other towns because of [the emigrants],'' said Laudino
 Miranda, district elections supervisor, who added that he is urging his 23-year-old
 son to go to the United States to join his brother.

 Townspeople say the tradition got started 25 years ago when two women made it
 to ``El Norte'' and wrote home urging others to follow. About 4,500 Carataguayans
 now live in the United States, out of a regional population of 7,500. ``Everyone
 here has a relative living in the States,'' town priest Marciano Toledo said.

 Many immigrants sell their homes or livestock to pay up to $5,000 to obtain false
 Argentine or Uruguayan papers, because citizens of those countries don't need
 U.S. visas. Or they travel to Mexico and contract a ``coyote'' to smuggle them
 over the border.

 Caraguatayans' renowned expertise at getting into the United States leads
 Paraguayans from other regions to come for advice on how it's done, church
 deacon Cayo Martinez said. Nevertheless, some never make it -- the death of a
 young Caraguatayan who suffocated in a vehicle in the Mexican desert made
 national headlines here last year.

 The danger doesn't deter many would-be migrants because the alternative is more
 than likely unemployment or low-wage work in Paraguay's sliding economy. Last
 year's estimated jobless rate of 18 percent is expected to increase to 20 percent
 this year, according to the Paraguayan-American Chamber of Commerce, while
 the monthly minimum wage stands at less than $200.

 Not everyone in Caraguatay feels that emigrating is the answer, especially when
 those who enter the United States illegally are limited largely to futures as maids,
 gardeners and construction workers. Officials became alarmed several years ago
 when so many adolescents emigrated that ``suddenly we didn't have any young
 people left,'' said school district secretary and former Mayor Veva Antunez. ``They
 turned 18 and went.''

 The school district started implementing programs to teach youngsters how to
 add value to farm products -- by candying fruits, for example -- and pressing the
 government for more university scholarships and industrial and job-training
 projects.

 Antunez believes the push has helped to stem the emigration tide somewhat,
 although she lacks specific numbers.

 ``I don't hear people talking about it as much as before,'' she said.

 But those who remain are sorely tempted when U.S. relatives arrive bearing
 suitcases of gifts, fancy clothes and cash for lavish parties. Last Christmas, the
 expatriates decorated a pine tree in the town square to simulate New York's
 Rockefeller Center tree for a millennium celebration.

 The emigrants are also building retirement homes on a parcel of land on the edge
 of town that locals have dubbed Yankeeville. That's enough to make many young
 people want to leave their hometown, where oxcarts and farm plows are still
 commonly used.

 Angela Cabratones, 17, said she and her sister plan to go to the United States as
 soon as they finish school.

 ``There's nothing here,'' she said.

 Antunez said that attitude prevails because a myth has sprung up about the
 United States.

 ``I go to collect my pension in Asuncion and they say, `You don't need it, you're
 from Caraguatay,' '' she said. ``Nothing could be further from the truth! There's no
 big economic benefit for the town or for relatives. The immigrants don't send large
 amounts of money because they don't earn much.''

 But with the Paraguayan economy stalled and with the legend aided by a bit of
 exaggeration, emigration is likely to continue.

 ``It's not good for the town, they come back very materialistic,'' Antunez said.
 ``We live more spiritually here.''