FBI DIRECTOR MUELLER'S VISIT TO PARAGUAY:

C O N F I D E N T I A L SECTION 01 OF 07 ASUNCION 001312

SIPDIS

FBI FOR DIRECTOR MUELLER

E.O. 12958: DECL: 10/18/2015
TAGS: PREL PGOV PTER SNAR KCRM PA
SUBJECT: FBI DIRECTOR MUELLER'S VISIT TO PARAGUAY:
SCENESETTER

Classified By: PolOff Mark A. Stamilio, reasons 1.4(b) and (d).


1. (SBU) Director Mueller, Embassy Asuncion warmly welcomes
your visit as an opportunity to promote U.S. law enforcement
interests and security cooperation with Paraguay. You come
at a sensitive time, following a recent SECDEF visit that
generated considerable press and political activity calling
into question important, security-related aspects of our
relationship with Paraguay. False allegations of plans to
build a U.S. military base in Paraguay and immunities for
U.S. military personnel who participate in joint exercises
here were the main focus, but the planned opening of a LEGAT
office in Asuncion also drew considerable attention. Press
interest in your visit likely will be high. What follows is
an overview of the current situation in Paraguay,
highlighting key issues, and suggested topics and talking
points for your scheduled meetings and press event.


2. (SBU) Note: Although there is no LEGAT office in Asuncion
at present, a resident FBI representative has been assigned
to another office in the Embassy here since May 2005. End
Note.

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Your Program in Asuncion
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3. (SBU) We look forward to your visit. The evening of your
arrival, you will receive a country team and
counter-terrorism briefing. The following day, you will meet
separately with Vice President Luis Castiglioni (who will be
Acting President during your visit),former Attorney General
and new National Security Advisor Oscar Latorre, Supreme
Court President Antonio Fretes, Interior Minister Rogelio
Benitez, and Paraguayan National Police (PNP) Director
General Fidel Isasa. Press availability is scheduled
immediately following your meeting with Castiglioni.
Following your meeting with Isasa, you are scheduled to
present a certificate of appreciation to Police Commissioner
Carlos Altemburger, Chief of the PNP's Counter-Terrorism Unit
(SEPRINTE),followed by a photo opportunity with senior
members of SEPRINTE.


4. (SBU) FBI Deputy Director Pistole met with Castiglioni
during his visit to Washington in May/June. Castiglioni has
proven to be an ally on matters of security. Your meetings
with him and other Paraguayan officials afford the
opportunity to strengthen existing rapport, and to discuss
ways to advance U.S. law enforcement interests and further
enhance bilateral security cooperation.

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The Political Scene: President Duarte's Efforts Under Fire
-------------- --------------


5. (C) Your visit comes two years into the Duarte presidency.
In that time, Duarte turned a massive fiscal deficit into a
large surplus, began a bold structural economic reform
program, revived the economy, and fought corruption. In
recent months, however, political support for Duarte has
sagged due to perceptions that his government has not taken
adequate measures to create jobs, tackle corruption, and meet
public security concerns. As part of a pact to gain control
of the Congress with the support of dissident Congressmen
from opposition parties, Duarte's party, the Colorados,
supported the election of a member of the socialist "Country
in Solidarity" Party, Senator Carlos Filizzola, to be
President of the Congress. Those opposed to this tenuous
pact are bitter about having lost control of the Congress in
the June elections and threaten to undermine the Colorados,
legislative agenda. Filizzola is often at odds with U.S.
policy. He opposes U.S. military exercises in Paraguay and
has called actions in Afghanistan and Iraq "genocide." While
as President of the Congress he will likely moderate his
views, his ascendancy is troubling for the U.S. agenda.

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Reforming the Economy, But Growth Insufficient
-------------- -


6. (U) Paraguay's formal economy relies on agriculture. It
features bloated but weak state institutions and the heavy
involvement of state-owned enterprises. There is
considerable activity involving the trading of imported
legitimate goods, as well as contraband and counterfeit
products, most of which are destined for Brazil or Argentina.
The Duarte government took office in 2003 on the heels of
Paraguay's worst recession in years promising to attack
widespread corruption and reform the economy. Duarte named a
non-partisan, technocratic economic cabinet and has supported
their efforts. On a macro-economic level, Paraguay's
performance has been strong: economic growth reached 2.6 and
4.0 percent in 2003 and 2004, respectively, and inflation was
brought down to near 3 percent in 2004. However, whereas the
government succeeded early on in getting some significant
economic reform laws through Congress, progress over the last
year has been slow. For Paraguay to escape from the poverty
affecting roughly half of its population, the country needs
to increase productivity by attracting capital and raising
annual growth rates closer to 5 or 6 percent. Success will
require the government to stay the course on macro-economic
stability and undertake deeper structural reforms.

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Paraguay's Public Security Challenges
--------------

7. (U) Members of the Free Fatherland Party (PPL),a far-left
political movement based in the countryside, kidnapped and
subsequently murdered the daughter of a former president,
Cecilia Cubas, whose body was discovered in February.
Evidence ties the PPL to the Revolutionary Armed Forces of
Colombia (FARC). A culture of distrust allowing for little
inter-institutional cooperation hampers the ability of
Paraguay's law enforcement community to tackle rising
concerns about public security; Paraguay's National Police
are widely disparaged by the general population as
incompetent and corrupt. Last November, given the lack of
confidence in the police, the President called the military
out of the barracks to assist with law enforcement efforts.
Its profile on the street has diminished in recent months as
focus on the Cecilia Cubas kidnapping recedes from the public
eye. The Cecilia Cubas murder and clear evidence of FARC
involvement shocked Paraguay's leaders and population.
Increased cooperation with Colombia and the U.S. and
realization of the need for better intelligence and other
security measures were one result.


8. (SBU) Note: The Paraguayan Attorney General's Office
recently requested FBI assistance in isolating the voices of
suspected Colombian and Brazilian nationals on an audio-video
recording of a PPL kidnapping rehearsal exercise. LEGAT
Buenos Aires forwarded the recording to the FBI crime lab.
Several months ago, SEPRINTE asked the FBI representative
assigned to Embassy Asuncion to send to the FBI crime lab
remnants of several charred address books seized in a raid
pursuant to the Cubas investigation. FBI analysis of both
evidentiary requests is pending. End Note.

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International Crime and Counter-Terrorism
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9. (U) The Tri-Border Area (TBA),the region of Paraguay that
meets Brazil and Argentina, near the city of Ciudad del Este,
is a primary USG concern. The area is notorious for drug and
other smuggling, including trafficking in persons,
intellectual piracy, document forgery, counterfeit cigarette
manufacturing, and loose border controls, especially at the
Friendship Bridge connecting Paraguay with Brazil.


10. (U) Paraguay cooperates closely with us in addressing all
the problems of greatest U.S. concern, including terrorist
fund raising by Hezbollah. Paraguay took the lead in
establishing a four-nation coordination group known as the "3
plus 1" (Argentina, Brazil, Paraguay, and the U.S.). Also,
despite the lack of specific anti-terrorist statutes,
Paraguay has actively prosecuted known terrorist fund-raisers
on tax evasion charges. FARC involvement with the Cubas
kidnapping and links to the local violent leftist PPL have
heightened Paraguayan concerns about terrorism. President
Duarte noted the threats from international crime, including
terrorist fund raising, in his July State of the Nation
address.


11. (C) Despite preoccupation with close-to-home terrorism
issues including kidnappings, local violent radicals, the
FARC, and fund raising for Hezbollah, Paraguay is reluctant
to take a lead in the war on terrorism beyond its borders.
This is due to pressure from Brazil as well as domestic
concerns that an aggressive anti-terrorism policy (e.g., vis
a vis the Middle East) will draw terrorist reprisals. In
addition, memories of abuses under the Stroessner
dictatorship remain a factor. Last year, President Duarte
received Chairman of the Joint Chiefs of Staff General Myers,
but then made a public show of announcing that Paraguay would
not send a contingent to Iraq despite surprisingly having
offered to do so when he met with President Bush a year
earlier. Given recent false allegations that the U.S. wants
to establish a military base in Paraguay to combat terrorism
in the TBA, we recommend tailoring public remarks about
Paraguay's role in the global war on terrorism in a way that
will not lend fuel to these false claims. Fresh claims of
abuses under the 35-year dictatorship of Alfredo Stroessner
also make counter-terrorism legislation and action sensitive
topics.


12. (SBU) Paraguay is a significant transit point for the
transportation of cocaine and other narcotics by air from
Colombia to Brazil. Much of the northwestern part of the
country is uninhabited, and the GOP has difficulties in
enforcing the law due to geography and the political power
some drug traffickers wield. Paraguay's national
anti-narcotics secretariat (SENAD) coordinates GOP
interdiction efforts, with significant assistance from the
DEA. In November 2004, Paraguay, Brazil and the DEA
collaborated in a joint operation that produced the seizure
of 260 kilograms of cocaine and the arrest of Brazilian drug
kingpin Ivan Carlos Mendes Mesquita, wanted in the U.S. on
drug trafficking charges involving Colombia's FARC
guerrillas. Paraguay extradited Mendes Mesquita to the U.S.
on June 27, a dramatic and unprecedented step. Clear
congratulations are appropriate. Post considers this case
emblematic of the success we achieved by working with the
SENAD as an autonomous unit. Paraguay has no radar and some
interlocutors may request U.S. assistance in this area. We
are looking into this possibility in the context of JIATF's
operation "Southern Light," but Paraguay has many other tasks
more important than obtaining radar, and we are supporting
phased improvements in enforcement and prosecution.

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U.S. Interests in Paraguay
--------------


13. (SBU) U.S. interests in Paraguay are focused on
strengthening democratic institutions, promoting sound
economic policies and good governance, disrupting criminal
organizations, and combating terrorist financing. Post
maintains bilateral assistance programs dealing with
combating narcotics trafficking, money laundering,
intellectual property violations, and trafficking in persons.
The U.S. has assisted the Paraguayan Government in
developing draft money-laundering and counter-terror
legislation. In the wake of the Cubas kidnapping, Vice
President Castiglioni traveled to the U.S. for meetings with
Vice President Cheney, FBI Deputy Director Pistole, and other
key officials to discuss a comprehensive approach to
Paraguay's security challenges, including a high-level
seminar that the Center for Hemispheric Defense Studies
(CHDS) conducted here in September. USAID and the Peace
Corps also have programs in the country. Paraguay has been
named a threshold country for Millennium Challenge Account
funding, and recently presented an ambitious USD 35 million
proposal to the Millennium Challenge Corporation.

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Key Law Enforcement Agencies and Activities
--------------


14. (SBU) The PNP's Counter-Terrorism Unit (SEPRINTE) is an
effective ally in our efforts to counter terrorist activity
and terrorism finance in the region. As noted in paragraph
9, above, Paraguay cooperates closely with us in addressing
all the problems of greatest U.S. concern, including
terrorist fund raising by Hezbollah. We are also working
closely with Paraguay's national anti-money laundering
secretariat (SEPRELAD) to improve Paraguay's ability to

SIPDIS
investigate and prosecute money laundering and terrorism
financing. The establishment of a LEGAT office in Asuncion
is a key aspect of our strategy for combating transnational
financial crimes. As noted in paragraph 11, above, with
significant assistance from DEA, Paraguay's autonomous
national anti-narcotics secretariat (SENAD) has achieved
considerable success in combating illicit drug trafficking.
Paraguay is also taking positive steps to investigate and
prosecute trafficking in persons, intellectual piracy,
document forgery, counterfeit cigarette manufacturing, and
customs and immigration violations.

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The Military's Role
--------------


15. (U) The military's primary mission is to protect
Paraguay's territorial integrity, defend the legitimate
authorities in accordance with the Constitution, and
cooperate in civil defense. It does not have a lead role in
counter-drug operations, but provides a specialized tactical
unit to support SENAD. The military's Special Forces unit is
in the process of organizing a company-size counter-terrorism
unit, and the Presidential Guard Unit has a specialized
counter-terrorist platoon. The Navy has a law enforcement
mission on Paraguay's rivers. The military is still seen as
the first to be called whenever there is a "crisis," and many
Paraguayans feel "safer" when the military is out on the
streets with the police.


16. (C) Recent press reports that Minister of Defense Roberto
Gonzalez conveyed to members of Paraguay's Congress interest
in adopting a shootdown policy appear to have been
inaccurate. Given Paraguay's lack of radar equipment,
Paraguay does not have the capability to monitor air traffic,
much less bring down planes involved in illicit activity
traveling in Paraguayan air space. The Ambassador flagged
for the Defense and Foreign Ministers the legal and political
ramifications of a decision to adopt a shootdown policy.
They assured the Ambassador that the Government of Paraguay
had no intentions of adopting such a policy.

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Discussion Topics and Talking Points
--------------


17. (C) We expect that Vice President Castiglioni will
explain the administration's vision and goals, which will
largely focus on domestic concerns related to reforming
Paraguay's culture of impunity and corruption because it
relates directly to the nation's law enforcement and security
challenges. He will express the government's commitment to
the struggles against terrorism and drug trafficking. The
Duarte administration believes that Paraguay's solid efforts
in these fields warrant more international assistance,
particularly from the U.S. Castiglioni probably will note
Paraguay's significant successes against drug traffickers and
other transnational criminals, and may specifically request
equipment such as radar and helicopters. Castiglioni will
welcome increased U.S. law enforcement and security
cooperation, and may note that Paraguay is also receiving
enhanced cooperation from Colombia. Your meeting with
Castiglioni would be a good opportunity to explore closer law
enforcement and security ties.


18. (SBU) A few topics you might discuss with Vice President
Castiglioni are as follows:

-- Congratulate Paraguay on its successes against drug
traffickers, such as the FARC-connected Mendes Mesquita, who
was recently extradited to the U.S.

-- Welcome Paraguay's continuing solid support in the
struggle against terrorism, particularly on prosecuting
terrorist financiers, and close cooperation with U.S.
authorities in this arena. Note that passage of anti-money
laundering legislation pending in the Paraguayan Congress
will enhance the tools Paraguay has to fight this scourge.
Also note that the establishment of a LEGAT office in
Asuncion is a key aspect of our strategy for combating
transnational financial crimes.

-- Note the importance to the U.S. and Paraguay of our
cooperation on other key law enforcement matters, and express
appreciation that the Duarte administration has given such
matters its full support despite domestic as well as foreign
criticism in the region.

-- (If asked:) Acknowledge that LEGAT Buenos Aires forwarded
to the FBI crime lab the request from the Attorney General's
Office for FBI assistance in isolating the voices of
suspected Colombian and Brazilian nationals on an audio-video
recording of a PPL kidnapping rehearsal exercise, and that
the FBI representative assigned to Embassy Asuncion forwarded
to the FBI crime lab remnants of several charred address
books seized in a raid pursuant to the Cubas investigation.
FBI analysis of both evidentiary requests is pending.


19. (SBU) Castiglioni hopes that you will speak with the
press during your visit, and suggested that you do so upon
exiting your meeting with him. He indicated that he would
not accompany you to the podium. Press interest will likely
be high. Paraguayan journalists are generally friendly
people. We suggest that you lead off with a short statement
about the purpose of your visit and your impressions after
meeting with the Vice President, drawing from the points
below, which we have prepared as a press release:

-- The purpose of this visit is to meet key government
leaders involved in law enforcement. The FBI Director will
also meet with Supreme Court President Fretes, the Minister
of the Interior, and others.

-- In June 2005, Vice President Castiglioni was in Washington
and met with FBI Deputy Director John Pistole.

-- Among the items discussed was the establishment of a Legal
Attach office at the U.S. Embassy in Asuncion, envisioned to
open in 2007. The Legal Attach is a representative from the
Federal Bureau of Investigation (FBI),and part of the U.S.
Department of Justice headed by Attorney General Alberto
Gonzales.

-- Asuncion will be the eighth capital city in Latin America
to receive the services of a Legal Attach office. Full
service Legal Attach offices now exist at the U.S. Embassies
in Brasilia, Buenos Aires, Santiago, Caracas, Bogota, Panama
City, and Mexico City. Around the world, the FBI now
maintains fully operational Legal Attach offices in 53
overseas locations, and is planning to set up 13 more over
the next two years, including one in San Salvador.

-- The Legal Attach office in Asuncion will conduct
traditional law enforcement liaison and provide training
activities for appropriate law enforcement personnel in
Paraguay. It will provide diplomatic representation and a
bridge of communication between U.S. and Paraguayan law
enforcement authorities, including access to information
databases and other resources maintained in the United States
and elsewhere.

-- The FBI Director's visit to Asuncion is part of a regional
visit to five Latin American cities. Director Mueller will
arrive in Asuncion following meetings in Brasilia.

(If asked:)

FBI Involvement in Paraguay

-- Q: When will the FBI office open here, and how many agents
will staff it?

-- A: The current plan is to open the office sometime in
2007, and to staff it with two FBI agents.

-- Q: Vice President Castiglioni has said the main purpose of
the FBI office here will be to provide training to Paraguayan
law enforcement personnel. What specific types of training
and services will the FBI office in Asuncion offer? Will the
FBI office do things other than arrange for training?

-- A: Training the FBI provides to local and international
law enforcement partners is designed to develop a
professional cadre of leaders through the FBI's National
Academy and similar programs, with the objective of building
expertise, specialized skills, and a high degree of ethical
values in law enforcement. In addition to training, the
Legal Attach office will provide traditional law enforcement
liaison between U.S. and Paraguayan law enforcement
authorities, including access to information databases and
other resources maintained in the United States and elsewhere.

-- Q: Does the FBI plan to conduct law enforcement operations
in Ciudad del Este? Will the FBI investigate crimes in all
parts of the country?

-- A: The Legal Attach office is intended to provide
diplomatic representation and a bridge of communication
between U.S. and Paraguayan officials. This is not our
jurisdiction, and we will not conduct independent law
enforcement investigations or operations here. Anything the
FBI does here will be pursuant to operations conducted by
Paraguayan authorities, since they have lawful jurisdiction
in this sovereign nation.

International Crime and Counter-Terrorism

-- As clearly outlined in the U.S. Report on Global
Terrorism, we believe the activities in the Tri-Border Area
are basically fundraising and financing, not operational in
nature.

-- We rely on the authorities in the countries involved to
provide the legal structure to allow the investigation,
arrest, and prosecution of persons involved in such
activities.

-- We are pleased by Paraguay's active cooperation in the
fight against terrorism. It has taken important steps to
counter this grave problem and was instrumental in helping
strengthen regional cooperation with the U.S. (through the "3
plus 1" mechanism).

Q: What proof do you have that Paraguay funds terrorists?

-- We never said that "Paraguay" funds terrorists, but rather
that individuals in Paraguay (specifically in the Tri-Border
Area) fund organizations engaged in terrorist activities.

-- Illicit activity, particularly along the tri-border,
fosters corruption, discourages investment, inhibits economic
development, and creates a milieu favorable to money
launderers and terrorist financiers.

-- President Duarte mentioned the threat from terrorist
financing in his annual message to Congress.

-- In recent years, Paraguay has convicted individuals for
tax evasion who have also been implicated in laundering money
for terrorist groups.

-- It is vital that Paraguay continue to prosecute and
convict those implicated in illicit activity, including money
laundering and terrorist financing.

Counter-Drug Efforts

-- Paraguay is making an important effort against drug
trafficking, despite limited resources. We applaud historic
achievements, including the arrest and extradition of Mendes
Mesquita, who had ties to the FARC.

-- We are confident there will be continued good performance
in this area, which will benefit the Paraguayan people as
well as the region at large.

Q: What types of assistance will the U.S. provide Paraguay to
meet its security challenges? Can you give us radar and
helicopters?

-- In 2004, the U.S. provided Paraguay with USD 1 million in
funds to assist Paraguay in combating narcotics trafficking,
money laundering, trafficking in persons, and intellectual
property rights piracy.

-- Those funds support training for judges, prosecutors, and
police, purchase of equipment, and conduct of operations.

-- Since 1987, the U.S. has donated over USD 5.8 million to
assist Paraguay's law enforcement efforts.

FARC Ties

-- Evidence of FARC ties to the Cubas kidnapping is very
disturbing. The FARC has demonstrated its readiness to
commit any number of atrocities, including kidnappings and
other forms of terrorism, to advance its objectives.

-- The U.S. recognizes Paraguay's commitment to address this
problem.

Rumors of a U.S. Military Base

-- Reports of U.S. intentions to base U.S. troops in Paraguay
are not true.

-- The truth is that small numbers of U.S. personnel, in
groups of generally 10-20 persons, will train with their
Paraguayan military colleagues during periods of two to six
weeks and then return to the U.S. No U.S. soldiers will be
deployed in Paraguay for extended periods of time.


20. (SBU) Topics you might discuss with Latorre, Fretes,
Benitez, and Isasa:

-- Recent successes against drug traffickers, and Mendes
Mesquita extradition.

-- Continuing solid support in struggle against terrorism and
close cooperation on prosecuting terrorist financiers.

-- Importance of passing anti-money laundering legislation to
enhance Paraguay's ability to fight this scourge.

-- (With Isasa:) Note importance of alliance with SEPRINTE in
struggle against terrorism and terrorism finance.

-- Importance to the U.S. and Paraguay of cooperation on
other key law enforcement matters, and appreciation that the
Duarte administration has given such matters its full support
despite domestic as well as foreign criticism in the region.

-- (With Latorre:) Ask what he sees as his primary role in
his new job as National Security Advisor, and what his top
priorities are.

-- (With others:) Ask what they see as Paraguay's top law
enforcement priorities.

-- (If asked:) Acknowledge that LEGAT Buenos Aires forwarded
request for FBI assistance in isolating suspected Colombian
and Brazilian voices on PPL kidnapping rehearsal video, and
that Embassy Asuncion forwarded to the FBI crime lab remnants
of several charred address books seized in a raid pursuant to
the Cubas investigation. FBI analysis of both evidentiary
requests is pending.
KEANE