PARAGUAY POLITICAL AND ECONOMIC UPDATE, AUGUST 7 -

UNCLAS SECTION 01 OF 02 ASUNCION 001025

SIPDIS

STATE FOR WHA/BSC AND EB/IFD/OIA
STATE PASS TO USAID FOR LAC/AA
STATE PASS TO USTR FOR LYANG
NSC FOR SUE CRONIN
TREASURY FOR OSIA MAUREEN WAFER
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR
COMMERCE FOR ITA SARAH COOK
SOUTHCOM FOR POLAD DAN JOHNSON

E.O. 12958: N/A
TAGS: PGOV PHUM PREL KCRM ETRD PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, AUGUST 7 -
AUGUST 13


1. (U) SUMMARY:
--New Mission Chief to Cuba is Pro-Castro
--Venezuelan Investment in Paraguay
--Drugs, Thugs, Guns and Money
--31 Small Economies Discuss Access at WTO

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New Mission Chief to Cuba is Pro-Castro
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2. (U) Luis Domingo Laino, son of Senator Domingo Laino, was
nominated to be the Paraguayan Chief of Mission to Cuba. The
official designation awaits signature approval, which is
merely a formality. Senator Laino, a member of the Authentic
Radical Liberal Party (PLRA),is known for his hostile views
against U.S. policies, including Iraq. Senator Laino is
pro-Cuba and during the Venezuelan President Hugo Chavez
visit, he met with Chavez.

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Venezuelan Investment in Paraguay
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3. (U) The Venezuelan government recently announced its
desire "to do whatever it takes" to upgrade Paraguay's only
oil refinery to handle five (5) times its current capacity,
ideally lowering the price of fuel. An increased refining
capacity would presumably allow the GOP to better process
Venezuelan crude oil. The Venezuelan Ambassador to
ParaguayJose Huerta Castillo also expressed his country's
interest in buying several unused cooking oil factories. He
said that a Venezuelan governmental fund dedicated to
investments in the Southern Cone would provide funding, and
emphasized the job creation possibilities of the investment.
He asserted that the factories would initially be owned by
Venezuela, but that over time the workers themselves would
gain ownership. The Venezuelan Ambassador stated that the
Venezuelan government wants to contribute to the
strengthening of Paraguay,s energy sector.

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Drugs, Thugs, Guns and Money
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4. (SBU) On August 11, Paraguay's National Anti-Drug
Secretariat (SENAD) and Chilean law enforcement with the

SIPDIS
assistance of Bolivian authorities, conducted joint
operations to capture members of an international drug ring
as part of a controled delivery. Law enforcement officials
in Santiago, Chile apprehended 13 suspects and seized two (2)
tons of marijuana. SENAD arrested 11 in Asuncion and Colonel
Oviedo, seizing 371 kilograms (kg) of marijuana in Colonel
Oviedo and 337 kg in Asuncion. Additionally, SENAD seized
four (4) vehicles, weapons, and currency. This operation
began in Santiago in June when authorities learned of the
truck hauling the drugs. The operation demonstrated
excellent cooperation and strenthened intelligence sharing
among Paraguay, Bolivia, and Chile.

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31 Small Economies Discuss Access at WTO
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5. (U) On August 9 and 10, the United Nations Office of the
High Representative for the Least Developed Countries,
Landlocked Developing Countries and Small Island Developing
States (OHRLLS),organized a conference of thirty-one (31)
countries in Asuncion to establish a common position to be
delivered during the December 2005 World Trade Organization
(WTO) ministerial meeting in Hong Kong, China. Those
positions include:

--Current WTO provisions on "freedom of transit" should be
further strengthened and operationalized to improve the
access of landlocked developing countries to world markets
through their transit neighbors in the most efficient and
cost effective manner. Transit services should be further
liberalized to encourage competition, and transit rules and
regulations should be simplified, harmonized, streamlined and
made transparent.
--Technical assistance is needed to help landlocked economies
recover from loss of market share in textiles, following the
December 31, 2004 expiration of the Agreement on Textiles and
Clothing.

--Simplified and streamlined accession procedures should be
extended to the nine (9) landlocked developing countries that
are not yet WTO members.
KEANE