PARAGUAY POLITICAL AND ECONOMIC UPDATE, SEPT. 25 -

UNCLAS SECTION 01 OF 02 ASUNCION 001246

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, SEPT. 25 -
OCT. 1


1. (U) Summary
-- Export Agency Head To Visit Iran
-- Death Of Customs Official Leaves Questions
-- LOA for INL Funds Signed
-- SENAD Agents Arrest Narco-Trafficker in Asuncion
-- Paraguay 5th Worst in Global Competitiveness Report
-- Asuncion Hosts First Ladies Conference



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Export Agency Head To Visit Iran
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2. (U) Iran,s concurrent ambassador to Uruguay and Paraguay,
Mohammad Faraji, has invited Luis Morinigo, head of the
national export promotion agency, ProParaguay, to visit Iran.
Plans for the visit are being coordinated by Iran,s
Ministry of Economy, and are expected to include visits to
industrial sites and meetings with the Iranian chamber of
commerce. Morinigo was quoted by local media indicating
Iran,s interest in purchasing rice and wheat from Paraguay.
Local producers, he said, could benefit from exchanges of
technology, chemicals and farm implements. Morinigo noted
that Iran,s purchases of beef and soy from Brazil amount to
approximately USD one billion per year, and that Paraguay's
lower prices make it poised to compete for a share of the
Iranian market.

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Death Of Customs Official Leaves Questions
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3. (SBU) Yolanda Benitez, Paraguayan Customs Director at a
private port in Ciudad del Este, was murdered on 9/23. Press
coverage has speculated that the death was a warning to
Customs Director Margarita Diaz de Vivar, who has been seen
as attacking corruption. President Duarte called a press
conference at his residence on 9/25 and spoke about the
seriousness of the attack and the need to rein in criminals
in Cuidad del Este. Embassy sources, however, indicate that
Benitez herself was corrupt, and that her death may have had
nothing to do with reforms within the customs service. The
press reports that suspicion is growing about the involvement
of Benitez, boyfriend. Law enforcement sources indicate
that much of the forensic evidence in the case was
mishandled, reducing the chances of an accurate investigation
into the death. Attorney General Ruben Candia Amarilla has
indicated that he plans to replace many of the prosecutors
working in Ciudad del Este. Also, National Police Commander
Fidel Isasa ordered the replacement of Nestor Recalde, the
director for the Fourth Police Zone, and Norberto Rivas, the
police chief in Ciudad del Este.

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LOA for INL Funds Signed
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4. (U) On 9/27, the Ambassador and FM Rachid signed a Letter
of Agreement on the terms for delivery of approvimately USD
600,000 in INL funding to the GOP. Paraguay's Anti-Drug
Secretariat (SENAD),the Secretariat for the Prevention of

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Money Laundering (SEPRELAD),and the Ministry of Industry and
Commerce's Specialized Technical Unit and Statistics Center
will receive these funds to support projects to combat
narcotics trafficking, money laundering, and IPR violations.
Of the USD 324,000 dedicated to projects to fight IPR
violations, USD 139,000 in funds will go to Paraguay's Office
of the Attorney General to enhance the ability of prosecutors
to investigate and prosecute IPR violations.


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SENAD Agents Arrest Narco-Trafficker in Asuncion
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5. (U) On 9/27, during a routine inspection of TAM airlines
at Asuncion International Airport, the National Anti-Drug
Secretariat (SENAD) arrested Cristian J.Geleano Oviedo for

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cocaine trafficking. With the help of a SENAD canine unit, 2
kilos of cocaine were found hidden in the compartments of
Oviedo,s luggage. According to SENAD agents the cocaine
destination was Valencia, Spain.


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Paraguay 5th Worst in Global Competitiveness Report
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6. (U) On 9/28, Local press reported that Paraguay had ranked
5th worst (113 out of 117 countries) in the Global
Competitiveness Report (GCR) produced by the World Economic
Forum. According to the GCR, Paraguay's low ranking reflects
concern about the weak state of institutions, corruption,
uneven respect for rule of law, diminishing respect for
property rights and the implications these and other factors
have had for macroeconomic management in the country.
Several commentators expressed concern that the report would
make it more difficult for the country to attract foreign
investment.

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Asuncion Hosts First Ladies Conference
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7. (U) From September 26-30, Paraguay hosted the 13th
Conference of First Ladies, Spouses, and Representatives of
Heads of State and Government of the Americas. First Ladies
from 11 countries attended, including Colombia, Panama,
Guatemala, Costa Rica, El Salvador, and Chile. Nine
countries sent representatives in lieu of their country,s
First Lady. Ambassador to the UN Commission on the Status of
Women, Ellen Sauerbrey, represented Laura Bush at the
conference. Local press highlighted the absence of
Paraguay,s MERCOSUR partners, as Brazil and Argentina sent
only a representative and Uruguay did not participate in the
conference.


8. (U) Each First Lady or representative provided a brief
summary centered on the conference,s theme, Women and
Family, which included highlights of programs and activities
offered in their countries to aid the advancement of health
care, education, reduction of poverty for women and children.
In her remarks, Ambassador Sauerbrey highlighted the
importance of the family, improved access to health care, the
importance of literacy for women, and U.S. AID programs
throughout the region. All countries present signed the
Conference Declaration and approved Action Plan, although
neither document called for any substantive results, such as
enhanced aid programs.
KEANE