PARAGUAY POLITICAL AND ECONOMIC UPDATE, OCT. 16 -

UNCLAS SECTION 01 OF 02 ASUNCION 001331

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 PA SNAR TBIO
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, OCT. 16 -
OCT. 22


1.(U) Summary
-- Paraguay Reacts to Transparency International Report
-- Paraguayan Government Takes Measure Against Avian Flu
-- Basket Made From Cocaine Seized by Senad Agents
-- Crashed Aircraft found with Cocaine and Weapons

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Paraguay Reacts to Transparency International Report
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2. (U) Paraguay remains the Latin American country perceived
to be the most corrupt (after Haiti),according to a report
released by Transparency International Index based in London.
Government officials maintained that since President Duarte
took office his administration has made policy changes to
address corruption. Some opposition leaders claimed that,
while Paraguay (especially the Colorado-led GOP) is corrupt,
it is no worse than Brazil and Argentina. They added that
Paraguay is singled out due to its weakness. In March 2005,
President Duarte and Transparency International Paraguay
Chapter signed an agreement allowing Transparency
International Paraguayan branch's participation in the
control of government programs and projects. COMMENT:
Although Paraguay,s 2005 rating is one of the lowest in the
region second only to Haiti in the Western Hemisphere,
Paraguay has improved its rating in the Index over the last
two years, Post will report further on TI report septel,
including 0.8 point improvement over last year (on a scale of
10) END COMMENT.


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Paraguayan Government Takes Measures Against Avian Flu
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3. (U) On 10/18, Manuel Barboza, director of the National
Service for Quality and Animal Health (Senacsa),announced
that the government is taking measures against the Avian Flu
threat in the region. Barboza stated that Paraguay has five
years of experience in carrying out control measures to
prevent this type of illness from entering the country.
According to reports, steps have been taken to reinforce all
Customs entry points and to check all the food brought in by
airlines into the country to prevent this illness. Barboza
also announced that Paraguay will attend the meeting on Avian
Flu organized by the Southern Cone Permanent Veterinary
Committee to be held this week in Montevideo. The purpose of
the meeting is to assess the avian flu case(s) in Colombia
and the foot-and-mouth disease outbreak in Brazil. Other
participating countries include Argentina, Bolivia, Brazil
and Uruguay.

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Baskets Made From Cocaine Seized by SENAD Agents
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4. (U) On 10/19, National Anti-Drug Secretariat (SENAD)
agents seized 6.98 kg of cocaine during a routine check at
Silvio Pettirossi International Airport in Asuncion. The
agents seized the cocaine with the help of an INL-funded
canine unit as a courier traveling to England, sought to
board his flight. According SENAD officials, the 25 baskets
appeared to be made from cane but the cane was actually paper
impregnated with cocaine and carefully varnished. According
to SENAD investigators, the two boxes that carried the
cocaine were sent from Cuidad del Este.

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Crashed Aircraft found with Cocaine and Weapons
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5. (U) On 10/13, a local farm worker discovered a small
single engine aircraft on a farm in the department of
Concepcion, 150 miles northeast of Asuncion and reported the
finding to local authorities. Inside the plane, Anti-Drug
Secretariat (SENAD) agents found the remains of the pilot,

SIPDIS
Erwin Bejarano Gandarrillas, a 45 year-old Bolivian man, in a
very advanced state of decomposition. In addition, they
discovered 51 packs of cocaine weighing 47 kg, 20 rocket
grenades, 11 automatic rifles and ammunition. All evidence
that did not represent a risk to the agents involved in the
investigation was taken to the local Public Ministry office
in the city of Yby Yau. All other evidence, such as rocket
grenades that represented a risk, were left behind for
experts to handle and investigate.


6. (U) SENAD is working on several hypotheses regarding what
happened to this plane and its final destination. SENAD
agents believe that the plane could have crashed about a year
ago according to the evidence collected. According to a
local press report, the evidence indicates that the plane
departed from Bolivia enroute to unknown areas in the
department of San Pedro or Amambay, where the drugs would
have been transferred to Brazil for commercialization. A
SENAD official conjectured the weapons were destined for the
FARC, for Brazilian drug gangs in Favelas, or Paraguayan
radical groups or criminals. The Colombian Embassy is
examining a possible FARC connection.
KEANE