PARAGUAY POLITICAL AND ECONOMIC UPDATE, SEPTEMBER

UNCLAS ASUNCION 001186 SIPDIS STATE FOR 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: PHUM PGOV PA PREL ECON SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, SEPTEMBER 11-17 ¶1. (U) Summary -- Paraguay Fourth Worst in Wealth Disparities -- Paraguay Rejects Brazilian FM Statement -------------- Paraguay Fourth Worst in Wealth Disparities -------------- ¶2. (U) On 9/12, the United Nations Representative in Paraguay announced that, according to a recent UN Development Program (UNDP) survey, Paraguay ranked as the fourth worst place in the world in terms of disparities of wealth, and the worst country in Latin America. The data is part of the Human Development Index (HDI),which is produced by UNDP. The HDI provides clear statistical reference on the number of people living under extreme poverty, based on unemployment rates, lack of opportunities and the absence of public policies by governments. According to the UN report 10 percent of the people who live in extreme poverty in Paraguay only received 0.6 percent of the country,s wealth, while 10 percent of the rich people receive 45.5 percent of Paraguay,s GDP, putting Paraguay,s wealth disparity at 73.4 percent. The projection of the wealth disparity in the country continues a negative trend, especially after reports from the World Bank in 2004 ranked Paraguay the lowest country in economic development in the South American region. -------------- Paraguay Rejects Brazilian FM Statement -------------- ¶3. (U) In recent weeks, Brazil has conveyed concern about Paraguay's "expanding" relationship with the US calling on Paraguay to explain the recent visit by SECDEF Rumsfeld, US-Paraguayan military exercises and comments by Vice President Luis Castiglioni about pursuing a bilateral trade agreement with the US. Brazil's FM charged a US-Paraguayan bilateral trade agreement would violate Paraguay's obligations under Mercosur. This response from Brazil has sparked resentment in Paraguay. President Duarte reaffirmed Paraguay's commitment to honor its obligations under Mercosur but also said that Paraguay has the right to maintain relations with any country, provided benefits accrue to Paraguay from those relations. On 9/15, Paraguay's Senate unanimously approved a resolution, that --"rejected the unfortunate comments made by Brazilian FM Celso Amorim in reference to the recent contacts made in the framework of relations with the Government of the United States;" --"ratified its commitment to strengthening ties in a framework of respect for the sovereignty, dignity and solidarity of MERCOSUR;" and, --"ratified the full sovereignty of Paraguay in its interational relations." ¶5. (U) COMMENT: Brazil, in raising the ire of Paraguay with its indiscreet remarks, did more to tame concern over mythical U.S. designs on its land and water than any response we could ever make. That is not to say people have stopped being concerned about U.S. intentions. It's just they are now more angry at Brazil, a country they view as historically disdainful and unresponsive to Paraguayan concerns and interests. End Comment. KEANE