As I'm sure you know, all prepositions take a gerund, with the exception of 'to', which sometimes (but not always) takes an infinitive. In fact, this happens so often that it's possible to think of 'to' as actually being part of the infinitive. In this case, 'to pave' is a to+infinitive combination indicating the MEANS of doing something. This has the same structure as when we use the infinitive to indicate the purpose of doing something e.g. He went out to buy some milk. Similar examples to your sentence are "He used his penknife to open the can of beans" or "He used his position to put pressure on politicians". In these sentences, the person has one thing (a penknife, a position) and he does the second thing ( open the can, pave the way) by using the first thing. He used the setback to pave .. = He used the setback as a means of paving... I hope that makes sense.

You can use to pave the way and to paving the way. You would use paving in the present tense. "Despite the set back he is now paving the way to success" You would use to pave the way in a past tense. Which is what your sentence is, the first part, not the second part->'for the next eighteen years'.