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