PARAGUAY POLITICAL AND ECONOMIC UPDATE, OCT. 23 -

UNCLAS SECTION 01 OF 02 ASUNCION 001355

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
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, OCT. 23 -
OCT. 29

1.(U) Summary
-- Brazil's Agenda in Paraguay
-- German Ambassador Responds to Duarte's Dig
-- Ambassdor Working Up Until Departure
-- Wichita Mayor Visits Paraguay
-- Colorado Party Holds Convention
-- FBI Director Visits Paraguay
-- Dominguez Runs For ANR President

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Brazil,s Agenda in Paraguay
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2. (U) On 10/23, Brazilian Ambassador Valter Pecly Moreira,
met with a local newspaper to discuss Brazil,s agenda in
Paraguay. Brazil is focused on integration between the two
states and seeks the peaceful solutions to controversies; it
would have to create programs with Paraguay to simplify
customs with integrated control and to facilitate commerce
and the promotion of productive investments. Military
cooperation between the two countries is of high importance
for Brazil with the hopes of improving the armed forces of
both countries. Ambassador Moraira also stressed the
cooperation with Paraguay in the fight against piracy, all
forms of contraband, drug and arms trafficking, and sexual
exploitation of children. Judicial cooperation to accelerate
the legal proceedings between the two countries is key.
Moreira initiative with the press was a response to a string
of controversies casting criticism at Brazil.

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German Ambassador Responds to Duarte,s Dig
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3. (U) On 10/24, German Ambassador to Paraguay, Dr.
Horst-wolfram Kerll, sent a letter to a local newspaper,
cleverly taking issue with President Duarte, the local
newspaper quoted President Duarte during a recent trip to
Spain qualifying Paraguay and South America,s poverty as
legacy of its colonial past and maintaining Europe had an
obligation to help Paraguay. The Ambassador pointed out that
Europe imports products worth millions of Euros from
developing countries and provides financial assistance to the
GOP through Mercosur. The EU is the largest importer of goods
produced by Mercosur. Germany has provided Paraguay much
assistance in the area of technology. It,s not fault of
Europe or Developed nations that countries that are rich in
natural resources continue to live in extreme poverty.
Rather, it is the responsibility of political leaders who
implement unprincipled policies. Developing countries will
remain poor until they effectively combat corruption,
eliminate nepotism and address impunity.

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Ambassador Working Up Until Departure
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4. (U) On 10/27, Hours before departing post, the Ambassador
granted radio and press interviews. He remarked on the
strengthening of US and Paraguayan relations over the past
two years and rejected the rumors that USG is interested in
installing a military base and wants the Guarani aquifer. He
stressed that a country such as Paraguay can not continue to
survive on donations. Development is born and created by the
people, and Paraguay needs to open its markets to private
companies, so that the country can attract foreign
investment. Upon conclusion of his remarks, the Ambassador
drove across Paraguay,s border with Argentina into
retirement from the Foreign Service and into the next chapter
of his life.


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Wichita Mayor Visits Paraguay
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5. (U) On 10/25, Carlos Mayan, Mayor of Wichita arrived in
Asuncion to offer his experience in managing municipalities
and offered advised to administrators of the various
metropolitan areas on how to resolve problem that afflict the
city. Mayan,s advised on how to solve problems related to
the collection of taxes, administration of the city and
investment in public works. He stressed that for democracy to
work citizens must develop a sense of responsibility.

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Colorado Party Holds Convention
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6. (U) On 10/23, A special convention was held by the ANR
(National Republican Association, Colorado Party) to
introduce changes in next year's internal elections based on
a proposal by the ANR leadership headed by President Duarte.
The convention appointed an electoral court which paved the
way for electing party officials in February and separating
the internal elections for municipal elections. It also
increased the number of Executive Board members from 72 to

90. The dissidents, who were in obvious minority, left the
convention when their request for secret voting was rejected,
but left open the possibility to challenge the convention's
decisions. Duarte,s supporter casted the conventions as a
strong vote of confidence in Duarte,s leadership. (See
Septel Report)

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FBI Director Visits Paraguay
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7. (U) On 10/27, Acting President Luis Castiglioni meet with
FBI Director Robert S. Mueller, III, who arrived yesterday as
part of a tour of several Latin American countries. Regarding
his visit, Castiglioni said that one of the issues they
discussed is the installation of an FBI office in the US
Embassy, which is expected to start operating early in 2007.
He announced that 20 prosecutors and police officers will
travel to Washington in December for training at the FBI
headquarters and that only two FBI agents will come to
Paraguay to act as liaison between the FBI and local security
organizations. Mueller also met separately with Interior
Minister Rogelio Benitez, Supreme Court President Antonio
Fretes, Newly appointed National Security Advisor Oscar
German Latorre and National Police Commander Fidel Isasa.
Issues discussed was the role of the future FBI office and
expressed that they will be working together with their
Paraguayan counterpart to combat transnational crime,
including money laundering, arms and human trafficking,
terrorism and narcotics. (See Septel Report)

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Dominguez Runs For ANR President
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8. (U) On 10/26, businessman Osvaldo Dominguez Dibb (ODD)
announced that his candidacy for the presidency of the
Colorado Party (ANR) signaling he had formed an alliance with
Colorado dissidents to include Juan A. Ramirez Diaz de Espada
and Alfredo "Goli" Stroessner (ODD,s),who are the leaders
of the National Republican Reconstruction (RNR) movement,
against the candidacy of President Nicanor Duarte Frutos in
the upcoming ANR primaries programmed for February 2006.
Ramirez, who was the RNR,s candidate for ANR president said
he was ready to give up his candidacy to Dominguez in order
to unify the dissident groups under one candidate in the
upcoming elections. (COMMENT: Dominguez is one of the richest
individual in Paraguay, notorious for his involvement in the
sale of contraband, including pirated cigarettes. He ran
against Duarte in the highly contested 2002 primaries for
presidential candidate and nearly defeated Duarte. END
COMMENT.)
JOHNSON