PARAGUAY POLITICAL AND ECONOMIC UPDATE, SEPTEMBER

UNCLAS ASUNCION 001186

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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

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Paraguay Fourth Worst in Wealth Disparities
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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.

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Paraguay Rejects Brazilian FM Statement
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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