C O N F I D E N T I A L SECTION 01 OF 03 ASUNCION 001046

SIPDIS

STATE FOR WHA/BSC

E.O. 12958: DECL: 08/19/2015
TAGS: PREL MASS MOPS KCRM PTER PINR SNAR PA KICC
SUBJECT: PARAGUAY: SECDEF RUMSFELD AFFIRMS SUPPORT FOR
STRENGTHENED COOPERATION

Classified By: A/DCM James P. Merz for reasons 1.5 (b) and (d).


1. (C) Summary. On 8/16, SECDEF Rumsfeld met for 90
minutes with President Duarte Frutos to discuss cooperation
in the fight against international terrorism and
transnational crime, challenges to democracy in Paraguay and
the region, and the expansion of economic opportunity.
SECDEF drew attention to destabilizing undemocratic elements
in the region, Cuba and Venezuela in particular. Duarte
described the political scene in Paraguay focusing on his
government's desire to generate economic growth and address
public security challenges. He appealed to the U.S. for
more open markets and greater assistance in tackling
transnational crime.


2. (C) The SECDEF's meeting on 8/17 with Defense Minister
Gonzalez centered on U.S.-Paraguay military cooperation and
Paraguay's efforts to contribute troops to the UN's
peacekeeping mission in Haiti. SECDEF reminded Gonzalez, as
he had in his meeting with Duarte Frutos, that GOP agreement
to an Article 98 agreement would facilitate some forms of
U.S. economic and military assistance.


3. (U) A group of some 50 protesters assembled to protest
the SECDEF's visit but in no way marred the overall positive
tone coming out of the visit. End Summary.


4. (U) On 8/16, SECDEF Rumsfeld accompanied by the
Ambassador, James G. Stavridis -- Senior Military Assistant;
Peter W. Rodman -- Assistant Secretary of Defense; Roger
Pardo-Maurer -- Deputy Assistance Secretary of Defense for
Western Hemisphere Affairs; A/DCM Merz; and DATT Dennis
Fiemeyer met with Duarte Frutos who was accompanied by VP
Luis Castiglioni, FM Leila Rachid, MOD Roberto Gonzalez,
Minister of Public Works Jose Alberto Alderete, Director of
Protocol Amb. Enrique Ramirez, Private Secretary Carlos

Santacruz, Armed Forces Commander Gen. Jose Kanasawa, and
Armed Forces Chief of Staff Gen. Caces. The meeting was
conducted in the President's personal residence, a privilege
the President rarely bestows upon foreign visitors.
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SECDEF Stresses Cooperation and Support
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5. (C) SECDEF conveyed support for Duarte's efforts to
combat corruption and transnational crime, including money
laundering and drug trafficking. The U.S. shared his
commitment to democratic reforms. U.S.-Paraguayan military
cooperation was beneficial to both sides. SECDEF was
pleased to learn a recent medical humanitarian exercise
(MEDRETE) had provided medical treatment to over 12,000
Paraguayans in the countryside. No country could solve its
problems alone. The U.S. supports Duarte's efforts to tackle
its problems and as a friend was looking for ways to provide
assistance.

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Duarte Describes Historic Mission and Appeals for U.S. Help
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6. (C) Duarte described his efforts to reform Paraguay as
historic. He represented the first President legitimately
elected since Stroessner's overthrow with no ties to the
exiled dictator. When he took office, the economy was in
recession, inflation was rampant, and Paraguay was in default
on international loans. Two years later, he boasted,
Paraguay had experienced two successive years of growth,
however modest, inflation was in check, Paraguay enjoyed a
fiscal surplus thanks to a significant increase in
tax/customs collections, and the country had won high marks
from the international banking community.


7. (C) Notwithstanding his government's achievements, his
administration found itself under constant assault by the
press for not producing noteworthy progress on the poverty
and public safety front. He complained frustration with
economic conditions and a peculiar nostalgia for the past
that prompts people to forget its more unsavory aspects had
produced significant popular support for the former
dictator's grandson, Goli Stroessner, who is running against
Duarte's supporters in next year's internal Colorado Party
election for senior leadership positions. At the other end
of the political spectrum, Duarte averred, the country's
leftists remained unable to attract popular support for their
agenda in large measure because they didn't speak the same
language both literally (most Paraguayans in the countryside
speak Guarani as their first language whereas many of the
leading leftist politicians come from Asuncion and struggle
with Guarani) and politically (the Colorado Party has long
political ties with the countryside that are difficult to
overcome). Other challenges to progress and democracy,
Duarte stressed, were weak state institutions, impunity, and
corruption, as well as weak civil society.


8. (C) Duarte assured SECDEF that Paraguay was committed to
fighting international terrorism and transnational crime
including narcotrafficking, piracy, and money laundering.
These problems obstructed his government's overarching aim to
generate economic growth to reduce poverty levels and address
concerns about public security. He appealed repeatedly for
U.S. assistance to help generate growth and tackle
transnational crime. He appreciated recent increases in the
U.S. import quota for organic sugar from Paraguay and
appealed to the U.S. to open its markets to other Paraguayan
exports such as meat and apparel. Paraguay had accomplished
much in fighting narcotrafficking and piracy on meager
resources. GOP efforts to combat illicit activity, however,
would benefit significantly from U.S. assistance in the form
of equipment, including radars.

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Military Cooperation, PKO Missions, and Article 98
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9. (C) Duarte welcomed military cooperation particularly
inasmuch as it delivered concrete health benefits to poor
Paraguayans and was characterized by respect for Paraguayan
sovereignty. SecDef and Duarte also agreed on the value of
expanded Paraguayan participation in PKO missions. Duarte
noted that Paraguay was willing, but lacks resources, which
led to a plea for greater US assistance to help outfit the
Paraguayan armed forces for a number of its missions (CD,
PKO, etc.). SecDef asked the question (rhetorically):
"Wouldn't reaching an Article 98 agreement facilitate our
ability to help with that?" There were some nervous fidgets
on the Paraguayan side of the table, and while Duarte
deliberately remained mute, the FM replied that she did not
think so. Nevertheless, the point was made and it stuck.

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Addressing Regional Threats to Democracy
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10. (C) Affirming U.S. respect for Paraguay's sovereignty
and its right to choose its own path of development, SECDEF
conveyed U.S. concern about the emergence of strong leaders
who seek to export problems and sow instability in the
region. In this regard, the U.S. was particularly concerned
about Cuban and Venezuelan efforts to export an ideology that
harms democracy. The expansion of opportunity and fighting
corruption were the best to shore up democracy, foster
stability, and attract investment.


11. (C) Duarte offered a mixed message in response. He
stressed, again, the importance of economic growth,
development, cooperation and assistance. Poverty and despair
represent the greatest threats to democracy in the region as
they create opportunities for the likes of a "Chavez,
Morales, or another Stroessner" to emerge and galvanize
support. Paraguay currently had a relationship with both
Cuba and Venezuela that redounded to its benefit
economically. Over 600 Paraguayan students were studying
medicine in Cuba. As in the U.S., Paraguay's foreign policy
responded, in large measure, to domestic interests and
Paraguay was hard pressed to reject this kind of valued
assistance. Paraguay was, on the other hand, looking at
putting an end to the Cuban program that involves dispatching
Cuban doctors out to the Paraguayan countryside out of
concern over the "problems" it generates.


12. (C) Venezuela was another story. It aimed to build a
model for power in the region based on providing significant
aid. The Paraguayan Government received assistance from
Venezuela in excess of USD 10 million in fuel subsidies which
Duarte contended dwarfed U.S. assistance. (Note: U.S.
assistance to Paraguay in the form of AID programs, INL
funds, Peace Corps volunteers, and military programs far
exceeds USD 10 million but a fraction of that goes to the
GOP, the source of Duarte's frustration. End Note.)


13. (C) Duarte signaled that he would prefer Paraguayan
youth obtain an education in the U.S. and that if such
scholarships were forthcoming he might consider ending the
Cuban program. He recalled U.S. aid programs delivered in
his youth in the context of the Alliance for Progress that
produced tangible benefits upon his generation. The end of
the Cold War, he lamented, however, had lead to significant
reductions in this kind of assistance. He recalled his
appeal to President Bush for more scholarships. In the
absence of the U.S. providing this kind of assistance, he had
to respond to domestic interests as a realist recognizing the
strong support the Cuban medical scholarship program enjoyed.


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SECDEF-MOD Focus on UN PKO Mission in Haiti
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14. (C) On August 17, SECDEF met with Minister of Defense
Gonzalez in a half-hour meeting that focused on Paraguay's
participation in peacekeeping missions. Gonzalez conveyed
appreciation for U.S. military cooperation particularly in
the form of U.S. MEDRETES, stressing Paraguay's commitment to
combating narcotraffickers as evidenced by the recent arrest
and extradition of Mendes Mesquita. He also conveyed
Paraguay's eagerness to participate in the UN PKO in Haiti,
noting its lack of resources proved the only obstacle.
Ambembassy ODC officials advised the SECDEF that they were
exploring avenues for possible U.S. assistance. SECDEF
reminded MOD that the GOP's decision to sign an Article 98
agreement would facilitate delivery of U.S. defense
assistance. The MOD tacitly acknowledged the SECDEF's
message. He alluded discreetly to MFA efforts to address
this issue but appealed to the U.S. to consider ways to
overcome this obstacle.

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Protesters Loud but Few
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15. (U) Approximately 50 protesters staged a small but loud
protest across the street from a SECDEF wreath laying
ceremony at a national military memorial. Almost an equal
number of riot police cordoned off the protesters from the
SECDEF's delegation. The protesters composed largely of
students armed with megaphones chanted insults and hoisted
signs condemning the SECDEF visit to Paraguay. Proceedings
went forward at the site as planned, however, and no other
protests occurred during the visit.

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Meeting Atmospherics
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16. (C) Notwithstanding criticism in the press over the
visit, Duarte was visibly pleased and invigorated during his
meeting with the SECDEF. While on occasion he lapsed into
speechifying in describing his achievements and appealing for
assistance, the exchange was marked by frequent displays of
humor on the part of both principals.


17. (C) Comment. SECDEF's aim to strengthen the U.S.
relationship with Paraguay and convey support was clearly
achieved. While Duarte devoted much attention to the forms
of concrete assistance Paraguay seeks to derive from the
relationship, he also recommitted Paraguay to strengthened
cooperation with the U.S. in the consolidation of democracy,
the fight against terrorism and transnational crime, and the
expansion of economic opportunity. We look forward to
building on the good will produced by this visit in our
mission's objectives in these areas. End Comment.


18. (U) SECDEF did not have an opportunity to clear on this
message. We understand SECDEF will be producing its own
report on this visit.
KEANE