PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 16-22

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 000557 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: 04/22/2015 TAGS: PGOV PREL PINR SNAR PA SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 16-22 REF: A. ASUNCION 00514 ¶B. ASUNCION 00512 ¶C. ASUNCION 00458 Classified By: PolOff Mark Stamilio, reasons 1.4(b) and (d). ¶1. (U) Summary -------------- -- Health Minister still in good graces with NDF -- NDF's failure to attend Pope's funeral a "miscalculation" -- Former Colombian President opens mouth, inserts foot -- Brazilians shoot down plane that transited Paraguay -- Chamber of Deputies President backs away from pro-Oviedo remarks -- National Police Chief resigns -- Counterfeit USD bills raise concerns Health Minister still in good graces with NDF -------------- ¶2. (U) After last week's exchange of barbs between VP Castiglioni and Health Minister Velazquez over a possible inquiry into the latter's administration of public funds and projects as the former Mayor of Fernando de la Mora (ref B), President Duarte publicly expressed his continued confidence in Velazquez. Duarte took advantage of an unrelated media event in Central Department to praise Velazquez for his judicious use of public resources as Health Minister, and the savings that resulted. (Note: Velazquez is one of several Colorados vying to become President of the Colorado party in upcoming internal elections. He is also the head of a committee exploring the possibility of a Constitutional reform that would permit the President of the country to run for re-election. End Note.) NDF's failure to attend Pope's funeral a "miscalculation" -------------- -------------- ¶3. (C) On 4/19, Aristides da Rosa Cano, leader of the Colorado bench in the Chamber of Deputies, told PolCouns that President Duarte's decision not to attend the funeral of Pope John Paul II was a "significant political miscalculation." Da Rosa indicated that Duarte was surprised by the strong criticism he received for his apparently personal decision not to attend the funeral. Da Rosa commented that front-page photos of three U.S. Presidents and Secretary Rice kneeling in front of the Pope at his viewing reinforced just how significant a mistake it was, and increased public resentment over Duarte's decision. ¶4. (C) Comment and Bio Note: Da Rosa is a novice politician, but a long-time confidant of the President. They were colleagues at Ultima Hora newspaper. Da Rosa worked as Duarte's Chief of Staff when Duarte was Minister of Education. He accompanied Duarte to the White House in 2003. Paraguay is a predominantly Catholic country. Duarte was born into a Catholic family, but married a Mennonite. According to da Rosa, Duarte was not baptized in the Mennonite Church but considers himself more Mennonite than Catholic. Duarte's religious preference has been an issue of political commentary throughout his presidency. His decision not to attend the Pope's funeral merely stirred up further discussion of the matter. On 4/20, the GOP announced that Duarte will lead a Paraguayan delegation traveling to the Vatican for Pope Benedict XVI's 4/25 inauguration Mass. End Comment and Bio Note. Former Colombian President opens mouth, inserts foot -------------- -------------- ¶5. (U) On 4/18, President Duarte and Paraguay's electoral commission (Tribunal Superior de Justicia Electoral, or TSJE) hosted the 11th Conference on the Quito Protocol, which deals with electoral issues. Former Colombian President Andres Pastrana was the keynote speaker, and delivered an address on transparency and freedom of information. During the address, he strayed into criticism of presidential re-elections and the use of electronic voting machines. His commentary on presidential re-elections was presumably directed at incumbent Colombian President Alvaro Uribe, who is seeking re-election. However, as noted in paragraph 2, above, Duarte is also interested in pursuing re-election. Additionally, Paraguay is particularly proud of its record in using electronic voting machines in national elections, and might propose an initiative on the matter for the upcoming Ministerial Conference of the Community of Democracies (ref A). Duarte met with Pastrana for 20 minutes prior to the event, but abruptly walked out of the conference just prior to Pastrana's address, perhaps having learned in advance what Pastrana was planning to say. Members of the TSJE characterized Pastrana's remarks as "an unexpected digression." Brazilians shoot down plane that transited Paraguay -------------- -------------- ¶6. (U) According to press reports, on 4/17 Brazilian authorities conducting a counter-drug operation shot down a twin-engine Piper Aztec as the pilot attempted to take off and escape after refueling in Brazilian territory. The pilot was killed and the co-pilot wounded. The men were Brazilian nationals, and reportedly had prior convictions for trafficking-related offenses. The authorities estimate that they were transporting 500 kg of marijuana and 30 kg of cocaine, which they dropped from the plane over Uruguayan territory. The authorities recovered over 100 kg of the marijuana, which they believe to be of Paraguayan origin. Flight records show that the plane flew through Paraguay and Colombia. Chamber of Deputies President backs away from pro-Oviedo remarks -------------- -------------- ¶7. (SBU) Oscar Salomon of the Colorado party, President of the Chamber of Deputies, recently drew attention with remarks during a radio interview agreeing that Lino Oviedo, the jailed coup-plotter who leads the UNACE party, was the victim of "political persecution" and deserved a new trial. In a conversation with PolOff, Salomon backed away from the remarks, claiming that he only observed that many considered the court that convicted Oviedo politically biased. He denied having used the term "persecution" to describe Oviedo's situation, blaming a journalist for putting words in his mouth. Other Embassy contacts have said that Salomon's remarks were a calculated appeal for UNACE votes in a possible re-election campaign (the Chamber will elect new leadership the last week of June),though Salomon said privately that he is not interested in seeking re-election and is looking forward to being a simple deputy for the coming year. National Police Chief resigns -------------- ¶8. (U) On 4/21, Carlos Zelaya resigned as Chief of the National Police after only six months in the job. Fidel Isasa Palacios will replace him as the fourth officer to lead the force since President Duarte took office in 2003. Analysis of the implications of this development and biographical information on Isasa will follow septel. Counterfeit USD bills raise concerns -------------- ¶9. (U) Concerns about counterfeit bills that first appeared in Peru and Bolivia spread to Paraguay this week. The local press began reporting on fears that the same bills could appear here, leading to a front-page headline on 4/21. Based on a request from Post's Regional Security Officer, the U.S. Secret Service provided a document explaining how to detect SIPDIS the false bills. By Wednesday, 4/20, many banks, including ABN-AMRO, which handles Post's accounts and accommodation exchange, informally decided not to accept any bills with the letters CB, CD, or AB before the serial number. Post provided the Secret Service document to the Central Bank and asked that it be widely disseminated. Secret Service last provided training in Paraguay in July 2004. If the financial system's reticence to accept entire series of U.S. currency continues, new Secret Service training, as was done in Peru and Bolivia, may be necessary to calm the waters. KEANE