Identifier
Created
Classification
Origin
05ASUNCION512
2005-04-18 12:42:00
CONFIDENTIAL
Embassy Asuncion
Cable title:  

PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 8-15

Tags:  PGOV PREL PINR PTER KCRM PA 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 ASUNCION 000512 

SIPDIS

STATE FOR WHA/BSC AND EB/IFD/OIA
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: 03/20/2013
TAGS: PGOV PREL PINR PTER KCRM PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 8-15

REF: A. ASUNCION 00458

B. ASUNCION 00453

C. ASUNCION 00308

D. ASUNCION 00038

E. 04 ASUNCION 01226

Classified By: PolOff Mark Stamilio, reasons 1.4(b) and (d).

C O N F I D E N T I A L SECTION 01 OF 03 ASUNCION 000512

SIPDIS

STATE FOR WHA/BSC AND EB/IFD/OIA
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: 03/20/2013
TAGS: PGOV PREL PINR PTER KCRM PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 8-15

REF: A. ASUNCION 00458

B. ASUNCION 00453

C. ASUNCION 00308

D. ASUNCION 00038

E. 04 ASUNCION 01226

Classified By: PolOff Mark Stamilio, reasons 1.4(b) and (d).


1. (U) Summary
--------------
-- Council rules Rienzi must seek re-appointment to Supreme
Court
-- IMF employee accepts offer to head Central Bank
-- Health Minister on thin ice with NDF?
-- NDF polls Governors about constitutional reform,
re-election
-- Release of supermarket owner sparks heated protests
-- Two new charges filed against Hatem Barakat
-- SENAD Agents Arrest Police Officers in
Kidnapping/Extortion Case

Council rules Rienzi must seek re-appointment to Supreme Court
-------------- --------------

2. (U) Following the March 30 postponement of a Senate vote
on Supreme Court Justice Wildo Rienzi's re-appointment, the
Duarte administration announced that it planned simply to
leave Rienzi on the Court for two more years, when he would
reach the mandatory retirement age of 75 (ref B). The
announcement provoked a debate over two conflicting statutes
regarding the tenure of Justices and the proper procedures
for announcing and filling vacancies on the Court. The Court
ultimately conceded the issue, announced the vacancy created
by the expiration of Rienzi's current term, and transferred
the matter to the Council of Magistrates. The Council ruled
that Rienzi must compete for re-appointment. Within a
proscribed time frame, the Council will present a list of
qualified candidates to the Senate for selection with the
concurrence of the President.


3. (C) Rienzi is perceived as a strong supporter of the
Colorado Party. Supreme Court President Fretes confided to
PolCoun that President Duarte supported the decision to
announce Rienzi's vacancy over the strong opposition of

Colorado Party insider Sen. Galaverna. Until a new candidate
is selected, however, Rienzi remains a sitting member of the
Court. Galaverna continues to explore deals to keep Rienzi
on the Court; it is not unlikely that his name will appear on
a list of three names the Council submits to the Senate for a
vote.

IMF employee accepts offer to head Central Bank
-------------- --

4. (U) On April 12, Vice President Castiglioni announced that
IMF economist Monica Perez had accepted the Duarte
administration's offer to head Paraguay's Central Bank. If
confirmed by the Senate, Perez would replace Gabriel
Gonzalez, who resigned after a shooting incident at his home
on March 30 (ref A). Perez, a native Paraguayan, worked at
the Central Bank prior to joining the IMF, and previously
interned at the Inter-American Development Bank, the World
Bank, and the U.S. Federal Reserve. She completed her
undergraduate studies in economics at Paraguay's National
University in Asuncion, and received her Masters and Ph.D. in
economics from the University of Nuremberg, Germany.
Although a handful of opposition Senators have characterized
Perez as an outsider who does not understand Paraguay's
economic situation, the appointment reportedly faces little
opposition.

Health Minister on thin ice with NDF?
--------------

5. (U) Prior to his appointment as Minister of Health, Julio
Cesar Velazquez served as Mayor of Fernando de la Mora, a
community on the outskirts of Asuncion and one of 15
municipalities facing probes into the administration of funds
and contract awards, including during Velazquez's tenure as
Mayor. President Duarte submitted the list of 15
municipalities to the Chamber of Deputies last week.
Velazquez subsequently commented that complaints lodged
against him and his successor were merely politically
motivated attacks by detractors. Velazquez's comments
provoked a sharp public rebuke from Vice President
Castiglioni, who stated that any member of the administration
who does not adhere to principles of transparency and rule of
law should resign. Duarte has refrained from public comment.
Commentators suggest that he would like Velazquez to resign
but does not want to lose the support of Velazquez's
followers in Central Department.

NDF polls Governors about constitutional reform, re-election
-------------- --------------

6. (U) On April 13, during a meeting with Governors from
several Departments, President Duarte re-introduced the
possibility of pursuing constitutional reform, which would
likely include amending the Constitution to permit the
President to run for re-election (refs D and E). Duarte
reportedly asked the Governors their opinion on holding a
referendum to determine whether there would be public support
for a constitutional convention, which would be held within
the year. The leaders of all five opposition parties later
expressed their opposition to the proposal. The Liberal
Party, Paraguay's largest opposition party, has indicated in
the past a willingness to consider amending the Constitution
to allow a President to run for reelection only if an
amendment were also made to require a runoff election for
President if the candidate tallying the highest number of
votes did not receive a simple majority.

Release of supermarket owner sparks heated protests
-------------- --------------

7. (U) On April 11, Judge Ramon Melo ordered the house arrest
during pretrial detention of Juan Pio Paiva, the owner of the
Ycua Bolanos supermarket that caught fire on August 1,
claiming nearly 400 lives. The authorities are investigating
Paiva for criminal negligence and for allegedly ordering his
employees to lock the doors to the supermarket during the
fire to prevent looting. Melo ordered Paiva's transfer from
Tacumbu prison to the National Police Polyclinic Hospital for
treatment of his diabetes and heart condition, but since
there were no beds available in the hospital, he was placed
under house arrest. News of his release sparked heated
protests in front of Paiva's residence and one of his
supermarkets, forcing several businesses in the area to close
their doors on April 12. The protests led Melo to reverse
his decision, citing his failure to consider the "social
effects" of Paiva's release. Melo was subsequently recused
from the case, and Paiva was finally admitted to the
Polyclinic Hospital in the early morning hours of April 14.
For the sake of other patients, the protesters have agreed
not to protest in front of the hospital -- which is across
the street from the Embassy -- but will continue to picket
Paiva's supermarkets.

Two new charges filed against Hatem Barakat
--------------

8. (U) Prosecutors filed two new charges against Hatem
Barakat, a brother of money launderer and suspected terrorist
financier Assad Barakat, who in 2003 was convicted of tax
evasion and sentenced to six years in prison (ref C). The
new charges against Hatem involve the falsification of his
children's birthplace for purposes of obtaining Paraguayan
citizenship. Ironically, these seemingly less serious
charges carry a greater maximum penalty than the tax evasion
charges, subjecting Hatem to the possibility of eight years
in prison if convicted.

SENAD Agents Arrest Police Officers in Kidnapping/Extortion
Case
-------------- --------------


9. (U) On April 14, two agents from SENAD's Operations Unit
arrested three police officers and two employees of the
Public Ministry's Judicial Investigative Center (CIJ) on
charges of extortion. The gang allegedly kidnapped the two-
year old son of a woman whom they blackmailed for USD 1,000.
They also threatened to bring drug trafficking charges
against the woman who admitted to the DOA agents she had
traveled to Spain transporting cocaine. The employees of the
CIJ had identified themselves as DOA agents in telephone
calls to the woman demanding the ransom. The case broke
however when the woman lodged a complaint with the Attorney
General's implicating police and CIJ officials leading to
their arrest by the DOA agents.
KEANE