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

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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
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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
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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
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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

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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