PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 2-7

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SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 2-7


1. Summary:
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--Paraguay and Brazil sign agreement to quell border control
dispute
--New poll shows deterioration in Duarte's image
--Controversy over Duarte's decision not to attend Papal
funeral
--Government-owned phone company introduces wholesale
Internet service

Paraguay and Brazil sign agreement to quell border control
dispute
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2. On April 16, FM Rachid signed an agreement with Brazilian
Ambassador Valter Pecly Moreira to increase the amount of
purchases made by Brazilian tourists in Ciudad del Este from
USD150 to USD300. The GOP had originally asked to raise the
figure to USD500. Other key points in the agreement call for
strict control of the Friendship Bridge (connecting Paraguay
and Brazil) to eliminate contraband and third-party sales,
Paraguayan issuance of legal receipts for purchases over the
USD300 limit, infrastructure improvements to immigrations and
customs controls on both side of the bridge, and for a ban of
merchandise transit from Paraguay to Brazil after 1900 hours.

New poll shows deterioration in Duarte's image
-------------- -

3. A poll by the Opinion Studies Group (GEO),commissioned by
the daily La Nacion, released on April 3 claims that
President Duarte's popularity has declined rapidly over the
past six months. Only 11.9% of respondents rated the
president's performance as "good," 36.9% rated it as "bad" or
"very bad," and another 48.6% rated it "regular," which can
carry from neutral to mildly pejorative connotations in
Paraguay. Duarte rejected the poll's results, producing an
alternative poll from a rival firm showing a 58% approval
rating. Duarte's popularity has been under pressure for the
last several months, especially in the wake of the GOP's
inability to solve the Cecilia Cubas kidnapping before her
murder. However, both polls raise methodological concerns.
The government's poll did not come with data on how
respondents were surveyed, and the GEO poll only surveyed
registered voters in Asuncion and the immediate surrounding
area.

Controversy over Duarte's decision not to attend Papal funeral
-------------- -

4. On April 5, President Duarte's office announced that
Vice-President Luis Castiglioni would head the official
Paraguayan delegation to the funeral of Pope John Paul II.
The announcement aroused opposition in the press and among
the Congressional opposition, who said it was inappropriate
for the President of one of the world's most heavily Catholic
countries not to attend personally. (Within the Southern
Cone, only Brazil and Bolivia will be represented by heads of
state. The Argentine, Chilean, and Uruguayan presidents are
sending either vice-presidents or cabinet ministers as
representatives.) Several journalists highlighted their
disappointment by pointing out that John Paul had received
Duarte enthusiastically at the Vatican last October.
Duarte's relations with the Catholic Church have been uneven
during his nearly two years in office, with reports of
tension between the president and the hierarchy arising from
Duarte's attendance at an evangelical Mennonite church.
Conversely, Castiglioni is reportedly a devout Roman Catholic.

Government-owned phone company introduces wholesale Internet
service
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5. The Paraguayan Communications Company (COPACO),the
state-owned telephone provider, announced that during the
first half of April it will begin selling wholesale Internet
access to Paraguayan service providers (ISP). COPACO, which
over the last few years has been hostile to the growth of the
Internet in Paraguay, signed an agreement with Telefonica of
Argentina, and will route its traffic through Buenos Aires to
the U.S. Internet backbone in Miami via undersea cable.
Presently, Paraguayan ISPs can only connect to the global
Internet backbone by satellite, making Internet access fees
here among the highest in Latin America.
KEANE