PARAGUAY POLITICAL AND ECONOMIC UPDATE, FEBRUARY

UNCLAS SECTION 01 OF 02 ASUNCION 000308

SIPDIS

SENSITIVE

STATE FOR WHA/BSC, WHA/PPC, EB/IFD/OIA, 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: N/A
TAGS: PGOV PREL SMIG PHUM KCRM KWMN PINR PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, FEBRUARY
26-MARCH 4


Sensitive but unclassified. Please protect accordingly.


1. (U) Summary:
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--President Duarte and Chilean President Lagos talk security
--Supreme Court rejects Barakat appeal
--Prosecutors defeat teen prostitution ring
--German national arrested for role in TIP ring
--Colombian nationals arrested with false Bolivian passports
--Fire in natural reserve burning out of control

President Duarte and Chilean President Lagos talk security
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2. (U) During a Montevideo bilateral meeting coinciding with
the inauguration of Uruguayan President Tabare Vasquez,
Chilean President Ricardo Lagos offered President Nicanor
Duarte his government's assistance with the implementation of
a security plan in Paraguay. The offer coincides with a
broad-based outcry in Paraguay for the GOP to improve law
enforcement and public security. Lagos offered training
courses to Paraguayan police officers and technical
assistance to improve the response of Paraguayan police to
citizen complaints. As part of the offer, Chile will also
send experts to Paraguay to participate in attempts to create
"neighborhood watch" programs.

Supreme Court rejects Barakat appeal
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3. (U) On March 2, the Supreme Court rejected Assad Barakat's
appeal to have his conviction overturned. Barakat, suspected
of financial connections with the Lebanese terrorist
organization Hizbollah, was convicted in 2003 of tax evasion,
and had appealed to the Supreme Court to dismiss the case
against him or recognize him as a political prisoner, a claim
the Court denied. The rejection of the appeal confirms
Barakat's conviction and means that Barakat will serve his
full six-year sentence, which will expire in July 2008.

Prosecutors defeat teen prostitution ring
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4. (U) On February 27, prosecutors broke up a ring
trafficking adolescent girls into prostitution. An
"employment agency" in the Asuncion suburb of Lambare
recruited girls aged 14 to 16 for work as domestic servants
in Asuncion, and sent them to work in a brothel. The girls
were never permitted to leave the premises. Police rescued
several adolescents from the brothel and arrested three
Paraguayan women for forcing minors into prostitution.
Teresa Martinez, lead prosecutor for TIP cases in the
Attorney General's Office, told PolOff that several South
Korean nationals are under investigation for their potential
role in the ring. She added that the Attorney General is
considering a larger investigation into the activities of
employment agencies for domestics.

German national arrested for role in TIP ring
--------------

5. (U) Gunther Merz, a German national who had already been
arrested in Paraguay and Brazil on multiple occasions, was
arrested by Interpol in an Asuncion suburb on March 1,
charged with organizing a trafficking ring sending
adolescents from the Paraguayan interior into prostitution in
Spain. Merz was arrested in 1997 and 2001 on charges of
distributing child pornography. He will be held in prison
here while the GOP processes extradition requests from Brazil
and Germany.

Colombian nationals arrested with false Bolivian passports
--------------

6. (SBU) On February 27, police arrested five Colombian
nationals found to have false Bolivian passports taped to
their bodies. The individuals had cleared immigration with
their Colombian passports. In their deposition to Paraguayan
police, the Colombians stated they intended to use the
Bolivian passports to attempt to enter the United Kingdom.
(Comment: Many South Americans obtain illegitimate passports
from neighboring countries to attempt to evade the visa
requirements of European countries. However, Bolivians
require visas to enter the U.K., and the false passports
lacked British visas, real or forged (Bolivian nationals,
unlike Colombians, do not need passports to enter other
European Union (Shengen) countries). Colombian Ambassador
Bernal reported that the names of the five do not appear in
any Colombian database and that he had drawn the initial
conclusion they were in fact traveling for economic motives
and not/not in connection to international crime or
terrorism. He agreed to provide us names to check against
U.S. lists. End comment.)

Fire in natural reserve burning out of control
--------------

7. (U) On March 1, a fire erupted in the San Rafael natural
reserve, burning in several locations spanning the
departments of Caaguazu and Itapua. As of the March 4, 800
hectares and 17 homes had been consumed, and 200 firefighters
are engaged in efforts to put out the fire. The GOP has
asked for assistance from neighboring countries, and both
Argentine and Brazilian firefighters and water bombers are
already en route to the region. The fire began in an area
that squatters have held for the last four years, and local
authorities told a member of the USAID office they suspect
that the fire began when squatters burned their soy crops,
fearing that the police were about to evict them.
JOHNSON