PARAGUAY POLITICAL AND ECONOMIC UPDATE, FEBRUARY

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 000226

SIPDIS

STATE FOR WHA/BSC, EB/IFD/OIA, WHA/PPC, AND G/TIP
STATE PASS TO USAID FOR LAC/AA
STATE PASS TO USTR FOR SCRONIN AND LYANG
NSC FOR KIM BREIER
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: DECL: 02/11/2015
TAGS: PGOV PREL PHUM KWMN SMIG ECON PINR PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, FEBRUARY
5-12

REF: A. ASUNCION 161


B. 2004 ASUNCION 1473

Classified By: Charge Kevin M. Johnson For Reason: 1.5 (d).


1. (U) SUMMARY:
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-- Colman Congressional Scandal Continues
-- FonMin Meets Canadian leaders
-- Paraguay Seeks TIP Extradition from Spain
-- Chavez to Visit Paraguay?
-- Hijazi Officially Charged

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Colman Congressional Scandal Continues
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2. (U) Colorado Deputy Julio Colman, embroiled last week in
a scandal involving a suspect load of timber and threats to a
prosecutor, told the press he would waive his Congressional
immunity and face the charges against him, apparently at
NDF,s urging. A Colorado Deputy told CDA, however, that
Colman has cold feet, worried he would be immediately
detained. Colman is preparing a counter-attack against the
fiscal, charging her with a history of misconduct, and may
now fight losing his immunity. Many Colorado party members
voiced their support for Colman, and NDF reportedly told
Senator Carrizosa that Colman is not corrupt. Many others,
however, within the GOP as well as the NGO sectors have
denounced Colman's actions and are calling for his removal
from office and prosecution. Prosecutor Rafael Ojeda is
seeking charges of making threats, obstruction of justice,
and coercion. The Executive Colorado Party, and Lower House
are all smeared by this gross, public abuse of power.

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FonMin Meets Canadian leaders
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3. (U) Foreign Minister Leila Rachid visited Ottawa on
February 8 as part of a North American visit. In meetings
with FonMin Pierre Pettigrew and House of Commons Speaker
Peter Milliken, Rachid discussed the ongoing negotiation of a
free trade agreement between Canada and the Mercosur common
market, which she revealed to be behind schedule. (Note:
Paraguay presently holds the rotating presidency of Mercosur.
End note.) According to Ines LeMinter, PolCoun at the
Canadian Embassy in Buenos Aires, Rachid also pressed
Pettigrew to reopen the Canadian Embassy in Asuncion, closed
around a decade ago for financial reasons. LeMinter noted
that DFAIT (the Canadian foreign ministry) is not
contemplating any new posts in Latin America.

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Paraguay Seeks TIP Extradition from Spain
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4. (U) Omar Mendoza, the Interpol liaison officer with the
National Police, told PolOff the Spanish National Police
arrested Paraguayan national Carolina Duarte this week and
the GOP filed an extradition request. A trafficking victim
from the city of Villarica identified Duarte as a member of
the network that lured her to Spain with a false promise of
employment in a supermarket. The victim was forced into
prostitution upon arrival. (Note: two traffickers have
already been convicted and sentenced in the case. End note.)
This is the first attempt by the GOP to request a
TIP-related extradition. Teresa Martinez, the leading TIP
prosecutor in the Attorney General's office, told PolOff that
Duarte identified two more members of the Villarica
trafficking network to the Spanish police, and that her
office used the information to file charges against the
individuals (Duarte's brother, and a neighbor).

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Chavez to Visit Paraguay?
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5. (C) Despite FM Rachid's representations that she was
trying to turn off a February 27-28 visit by Venezuelan
President Hugo Chavez (ref A),the local press reported on
2/10 that Chavez still plans to visit and will meet with
President Duarte to expedite an energy agreement signed by
both countries last November (ref B). On 2/9, MFA Americas
Director Cynthia Filartiga told PolOff that the MFA did not
have confirmation one way or the other, and that the visit
"was probably not going to happen."

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Hijazi Officially Charged
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6. (SBU) GOP prosecutors officially charged Kassem Hijazi on
February 8 with tax evasion. Back taxes, interest and fines
could surpass US$ 7 million, sufficient for a 10-year jail
term if convicted. They also announced that they would
investigate 113 Cuidad del Este businesses linked to the
transfers made by Hijazi. On February 4, Hijazi appeared
before a judge to answer a request that he pledge additional
assets (prosecutors asked for about US$500,000) or face jail.
The presiding judge decided to accept Hijazi's pledge of a
lesser amount of property and he remains free, although one
of the lead prosecutors told Econ Chief that Hijazi must show
up weekly to sign a book and could be jailed if he misses and
appearance, and that the Brazilian Hijazi cannot leave
Paraguay. The prosecutor said he expected that the Brazilian
authorities would cooperate in detaining Hijazi should he
choose to flee to Brazil.
JOHNSON