PARAGUAY POLITICAL AND ECONOMIC UPDATE, OCT. 01 -

UNCLAS SECTION 01 OF 02 ASUNCION 001272

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: PGOV PREL ECON SNAR KDEM PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, OCT. 01 -
OCT. 09

1.(U) Summary
-- Ambassador Keane Received Honors
-- Paraguay Ranks 7th in Democratic Development
-- Taiwan Donates $3 Million to Paraguay
-- Judicial Administrator Removed Under Charges of
Corruption

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Ambassador Keane Received Honors
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2.(U) On 10/3, Vice President Luis Castiglioni decorated the
Ambassador with the National Anti-Drug Secretariat (SENAD)
Meritorious Recognition Medal. Castiglioni described the
Ambassador as a friend and an ally in the struggle against
drug trafficking. Paraguay remained steadfast in its
commitment to fight drugs because it was "morally" the right
thing to do but thanked the U.S. for its cooperation and
support in this fight. On 10/4 the Ambassador received a
national recognition of Merit of Gran Cruz from the
Government of Paraguay. Foreign Minister Leila Rachid hosted
the ceremony and thanked the Ambassador for the significant
contribution he had made to strengthen U.S.-Paraguayan
relations. In his remarks, the Ambassador affirmed that the
"U.S. wants for Paraguay to be successful in its efforts to
implement fundamental reforms that will create a strong
foundation and will demonstrate that the road of responsible
democracy produces positive results".

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Paraguay,s Ranked 7th in Democratic Development
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3.(U) According to the Index of Democratic Development in
Latin America (IDD-Lat),produced annually by the Konrad
Adenauer Foundation, Paraguay's democratic credentials have
improved significantly over recent years. According to the
index, Paraguay ranked seventh and performed better than
other countries in the region including Argentina, Brazil,
Columbia and Venezuela. Parting from a low score in 2002,
Paraguay's current ranking places it around mid-range among
all the countries surveyed in the region.

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Taiwan Donates $3 Million to Paraguay
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4.(U) On 10/5, President Duarte received USD 3 million in
donations from the Taiwanese government through their
representative, Ambassador David Hu, in Asuncion. According
to reports, the money is part of a series of donations the
Taiwanese government has made to Paraguay in the past, and
will continue to donate as part of a promise made by the
Taiwanese government which will total USD 29 million over the
next three years (ending 2007). The funds will be used for
construction of 1,200 homes that will be donated to low
income families. President Duarte remarked that Taiwan's
donation is a reflection of the confidence the Taiwanese
government has in his administration. Ambassador Hu took the
opportunity to thank President Duarte for supporting Taiwan
at the UN General Assembly including its petition for
international recognition as an independent country. Press
reports suggested the funds were tantamount to compensation
for Paraguay's position on Taiwan before the UN but the MFA's
Director of Bilateral Affairs and former Ambassador to
Taiwan, Ceferino Valdez, denied that was the case.

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Judicial Administrator Removed Under Charges of Corruption
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5.(U) On 10/5, it was reported that Luis Insua Ego, General
Director of Administration and Finance of the Judicial
Branch, was dismissed for corruption. According to the
reports, Insue made several direct contracts with private
companies without going through the bidding process
established by the courts. The courts will submit all of the
evidence to the Public Ministry to initiate a criminal
investigation against Insua.
KEANE