The Chaco War was a conflict fought between Paraguay
over posession of the disputed Gran Chaco
border region. The Gran Chaco is one of the most inhospitable regions of South America
, a largely uninhabited desert that receives some of the lowest rainfall totals and highest temperatures on the continent.
Bolivia, still humiliated by the loss of her only coastline to Chile in the Pacific War in 1884, sought the Chaco because the region borded the Paraguay River which led to the sea - Bolivia still clung to the 19th century imperialistic ideal that great powers were sea powers. Paraguay desired the Chaco because the native Guarani tribe of Paraguay had been using the region to graze cattle for centuries. At first both nations sought a peaceful resolution to their competing claims, until 1928, when the discovery of oil in foothills near the Chaco brought the conflict to a head (ironically, drilling within the Chaco itself after the war failed to turn up a single deposit of oil).
Both nations sustained significant damage in the conflict, and the combined toll of the war was over 200,000 casualties. Ultimately Paraguay gained the upper hand, and when the conflict was finally settled by arbitration, most of the contested territory went to Paraguay.
For an excellent account of the Chaco War, visit http://www.carney.com/erik/forgotten_conflicts/chaco/