PARAGUAY DEMOCRACY BUILDING: SUCCESS STORIES AND

UNCLAS SECTION 01 OF 03 ASUNCION 001300

SIPDIS

FSI FOR LMS/SPS - MCMULLEN
PASS TO USAID

E.O. 12958: N/A
TAGS: AFSI KDEM PA EAID
SUBJECT: PARAGUAY DEMOCRACY BUILDING: SUCCESS STORIES AND
BEST PRACTICES

REF: STATE 182307


1. In support of the Secretary's emphasis on transformational
diplomacy and the request of FSI's Leadership and Management
School, the following is a short list of success stories and
best practices, submitted AMEmbassy Asuncion.

--------------
Municipal Finance
--------------


2. USAID sponsored efforts have helped local governments
strengthen their response to citizens, needs by providing
improved public services, such as potable water, garbage
collection, street improvements and maintenance, health
clinics, and schools financed with enhanced revenue
collection and increased expenditure effectiveness. As tax
collection has improved, related activities have promoted
citizen participation in local decision-making, transparency,
accountability and integrity to control corruption and
increase citizens, faith in their local government. As a
result, local governments are demonstrating that democracy
does work by listening and involving and responding to their
citizens.


3. Since 2002, 40 municipalities have increased property and
commercial tax collection by an average of 60 percent,
resulting in an additional $6 million in revenue; more than
200 new or improved local services have been implemented; and
over 100 transparency and participation governance
mechanisms, such as public budget hearings, citizen
committees for monitoring public works, access to information
policies, and education and development councils have been
implemented. Municipalities have increased accountability to
their citizens through transparent budgeting, improvements in
financial software, setting internal controls, and removing
corrupt public officials from office. The overall result of
USAID,s local government program has been that people have
learned how democracy works at the local level by exercising
their rights and responsibilities and seeing that democratic
institutions can be responsive, credible, and promote good
governance.

--------------
Global Development Alliance (GDA)
--------------


4. In 2004, USAID initiated a GDA with a local NGO, Alter
Vida, to strengthen good governance and to facilitate local
economic development. USAID emphasizes empowering local
partner organizations to negotiate alliances, build
agreements with the business sector, and reach formal
agreements among donors. Three significant alliances were
formed during the first year of project implementation:

-- A bio-diesel project that will include a new processing
plant and coconut micro-producers benefiting 500 families has
obtained USD 1.2 million in funding with USAID assistance.
This project works with a private bottling company, the
Catholic Church, six municipal governments and one
departmental government.

-- A 15-year recycling project to improve life conditions of
Asuncion metropolitan area solid waste landfill "recyclers"
is part of a loan and grant from the IDB and other resources.
The project works closely with the Municipality of Asuncion,
landfill recyclers and their associations, civil society
organizations, and businesses to sell recycled materials to
industrial plants for re-processing.

-- Recently, an environmental decentralization project
working in coordination with the National Environmental
Secretariat in one department was approved with USAID

SIPDIS
support. This will transform a completely centralized and
ineffective bureaucracy by decentralizing powers and
functions and establishing legal, administrative and
operational structures that allow for environment control and
auditing at the departmental level in such areas as
environmental impact studies.


5. These three projects have mobilized funds and a small
portion of in-kind resources for a total of USD 2,072,860, of
which only USD 130,545 are USAID funds. This approach should
help make these types of projects more sustainable, involves
a diversity of actors, helps build local capacity, focuses
USAID partner on looking for new resources, promotes a
greater sense of ownership, and USAID achieves a greater
development impact. Alliance members are beneficiaries and
contributors to the program goals based on common interests.

--------------
Congressional Public Hearings
--------------


6. In 2004, USAID took advantage of its unique experience in
promoting public hearings in the Congress and developed a
standard operating procedures guide and internal regulations
for both chambers of the Congress. With these procedures,
public hearings on proposed legislation at the Congress are
now being implemented in a more systematic and transparent
way. This has proved to be a key instrument for ensuring
citizen participation and the involvement of other sectors of
the Paraguayan society in the legislative process. Prior to
this assistance there had only been three public hearings in
the Congress. After the guide was developed and training
provided, there have been 34 hearings in a one-year period
(September 2004 - September 2005). USAID provided
approximately USD 35,000 to support this activity,
demonstrating that even with small amounts of funding
successful results can be achieved.

--------------
Citizen Participation in Political Process
--------------


7. For more than a year, USAID provided support to a
multi-sectorial advocacy group of more than 20 civil society
organizations, representatives from the National Integrity
Commission, media representatives, and members of the
Congress in developing a draft Freedom of Information Act.
The group presented the draft legislation to 16 legislators
and a public hearing was held to receive input. The
legislation is now in committee for review.

--------------
Human Rights
--------------


8. In August and September of this year, the Commander of the
Armed Forces, General Jose Kanazawa, twice issued a mea culpa
for errors committed by military personnel under his command.
Military personnel have been accused of harassment, beatings
and killings of civilians as well as deaths of conscripts.
This action shows progress in the GOP and its more senior
officials recognizing the importance of human rights. The
speeches by General Kanazawa were in public venues and, in
one case, President Nicanor Duarte Frutos was present and
accepted the apology.

--------------
Trafficking in Persons
--------------


9. The GOP and the US Embassy, along with the Department of
Homeland Security, organized and conducted a Trafficking in
Persons Assessment study to assess conditions and make
recommendations for immigration and border controls that
would assist them in combating the problem of trafficking in
persons, which has increased by 27 percent in the last 5
years. The study is a blueprint for directing USG resources
over the next few years to assist the GOP in its efforts.
Also, it identifies key areas where the GOP will need to
focus to curb the increase in trafficked persons.

--------------
Anti-Corruption and Rule of Law
--------------


10. The public continues to suspect the government of
widespread corruption and complains about impunity. However,
President Nicanor Duarte Frutos continues to denounce
corruption both in public and in private. There are a number
of achievements and reforms, either undertaken or under
consideration -- several with USG support -- that reflect
well on the government's reform record and intentions,
including:

-- Strong U.S.-Paraguayan counter-drug cooperation, building
on DEA support and INL funding, highlighted by the arrest of
Mendes Mesquita, a notorious Brazilian drug trafficker from
the Beira Mar organization, in November 2004, and his
extradition to the U.S., in June 2005, in the face of
significant political pressure for his release;

-- UTE, the anti-piracy unit supported by INL funding has a
strong track record of seizures of counterfeit goods. The
unit's leader, after being offered USD 40,000 to release
several containers of merchandise, worked the case that
culminated in the 9/15 arrest of a politically connected
(Colorado) customs official from the Cuidad del Este area who
has been an important player in facilitating trade in
contraband and counterfeit goods in the region;

-- Establishment of a respectable and well trained FIU thanks
in large measure to the support of a Treasury Department
Office of Technical Assistance (OTA) Resident Enforcement
Officer (REA) and INL funding used for training and equipment;

-- Creation of three new investigative units: in Customs -
the tax administration and an anti-corruption unit - and, an
inspector general unit within the Ministry of Finance, all
under the guidance of OTA REA and trained and equipped in
part with INL funds;

-- The first-time conviction of individuals, in late 2004,
for involvement in trafficking in persons (unfortunately the
two convicted were released on appeal, but we remain
reasonably confident the Supreme Court will reinstate their
six year sentences);

-- The first-time conviction of a customs employee for
illicit enrichment earlier this year on the basis of a law
adopted in late 2004;

-- A continued increase in year-on-year tax and customs
revenues, sustaining momentum following huge gains realized
in the government's first year;

-- Reforms by the Judicial Council, supported by USAID, to
reduce political factors in the selection of judges and
prosecutors, through the introduction of more objective
selection criteria, including a written examination;

-- Requests by the Ministry of Finance and the Supreme Court
for USAID assistance in the development of whistle blower
protection programs;

-- Announcement of a new tax regime to encourage
formalization of some of the leading commercial sectors in
Ciudad del Este, a haven for contraband, piracy, and other
illegal activity.

-- Continued strong macroeconomic management, supported by
President Duarte, that has led to strong performance
under Paraguay's IMF program, a public commitment to seek a
follow-on program to last through Duarte's term, and
continued fiscal restraint expected to achieve a balanced
budget this year.
KEANE