PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 30 -

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 000627

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: 05/06/2015
TAGS: PGOV PREL PINR PTER ECON ELAB PA KRCM
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 30 -
MAY 6

REF: A. ASUNCION 00605


B. ASUNCION 00594

C. ASUNCION 00512

Classified By: PolOff Mark Stamilio, reason 1.4(d).


1. (U) Summary
--------------
-- Senate re-appoints Justice Rienzi to Supreme Court
-- NDF on presidential re-election -- will he, or won't he?
-- Paraguay signs Open Skies agreement with Chile
-- IMF/IDB expert departs following death threat
-- ILO to conclude successful anti-exploitation project
-- Debernardi kidnappers sentenced to 18 years in prison
-- INL-funded drug dog nets 32 kilos of marijuana in CDE

Senate re-appoints Justice Rienzi to Supreme Court
-------------- --------------

2. (C) On May 5, the Senate voted 24-20 to permit tarnished
Colorado (ANR) party stalwart Wildo Rienzi to continue to
serve as Supreme Court Justice until he reaches the mandatory
retirement age of 75 in two years. The vote in Rienzi's
favor was the result of deals struck by a make-shift alliance
between the ANR and a handful of opposition Senators (ref A),
including the two socialist Country in Solidarity (PPS)
Senators, Carlos Filizzola and Nicolas Morinigo. Filizzola
is vying for the presidency of the Senate. He and Morinigo
voted for Rienzi's re-appointment over protests from within
their own party.


3. (C) Just prior to the vote, the Senate approved a
resolution authorizing the payment of 600 million guaranies
(approx. USD 102,000) to National Union of Ethical Citizens
(UNACE) party Senator Alejandro Velazquez, reimbursing him
for pay he did not receive after a vote orchestrated by ANR
leader Juan Carlos Galaverna blocked him from taking his seat
in the Senate during the previous congressional term.
Velazquez then voted in favor of Rienzi's re-appointment.
Ironically, it was Galaverna who orchestrated the Rienzi
deal, as well. (Comment: Velazquez recently stepped down as
UNACE party president. Although that move followed a period
of in-fighting between Velazquez and UNACE Senator Enrique
Gonzalez Quintana, it came as a surprise to most. Velazquez
was the only UNACE Senator to vote in Rienzi's favor. End
Comment.)


4. (U) The Council of Magistrates, which earlier ruled that
Rienzi must compete for re-appointment (ref C) and has
already begun the competitive selection process, announced
that it will convene a plenary session to decide what
institutional action it will take to counter the May 5 Senate
vote.

NDF on presidential re-election -- will he, or won't he?
-------------- --------------

5. (SBU) In a somewhat equivocal fourth shift of position on
the issue, this week President Duarte told a crowd of ANR
supporters that he would abandon his quest for re-election in
2008 "if that were deemed best for the country." However, he
asserted that he was still young, and that eventually he
would return to the Presidency "if that's what the people
want." Duarte has publicly gone back and forth on this issue
over the last several months. Presidential re-election would
require Constitutional reform, which the opposition has said
it would back only if the ANR agreed to provisions that would
allow Paraguayans residing abroad to vote in national
elections, further decentralize government, and change the
process for selecting judges and prosecutors. The ANR
initially balked at the opposition's demands, but this week
Duarte signaled that he might be willing to meet them.

Paraguay signs Open Skies agreement with Chile
-------------- -

6. (SBU) Close on the heels of the Open Skies agreement
Paraguay signed with the U.S. on May 2 (ref B),Paraguay
signed a similar agreement with Chile on May 4. Agreements
with Uruguay and Panama are also in the works. (Comment:
These agreements are a welcome sign that Paraguay is shifting
to a more open economy, less exclusively focused on its
traditional Mercosur trading partners and more willing to
reach out to others. End Comment.)
IMF/IDB expert departs following death threats
-------------- -

7. (U) Ives Soler, a French customs expert working on a
Paraguayan Customs reform project sponsored by the IMF and
IDB reportedly received a death threat on April 27. Soler
subsequently returned to France, as a precautionary measure,
until appropriate personal security measures can be put in
place for him. Finance Minister Dionisio Borda opined that
the threat came from someone with "powerful interests"
affected by the intended reforms, and requested U.S. help in
investigating the incident.

ILO to conclude successful anti-exploitation project
-------------- --------------

8. (U) The International Labor Organization (ILO) announced
this week that it will close its office in Ciudad del Este
(CDE) in August. Since 2001, the ILO's CDE office has
conducted a successful campaign to combat child sexual and
commercial exploitation in the tri-border area. It has
performed research, established local support networks,
raised awareness, and instilled sensitivity to the plight of
exploited children among police, prosecutors, judges,
teachers, and opinion leaders. Its research identified gaps
and inconsistencies in the laws of the three countries that
straddle the tri-border, Paraguay, Brazil and Argentina.
(Note: On May 13, PolOff will attend a seminar the ILO is
conducting in CDE, with U.S. DOL assistance, to present
several proposals intended to facilitate continued
tri-lateral cooperation in this area. End Note.)

Debernardi kidnappers sentenced to 18 years in prison
-------------- --------------

9. (U) At the conclusion of a one-month public trial, three
defendants in the case of the 2001 kidnapping of Maria Edith
Bordon de Debernardi were convicted and sentenced to 18 years
in prison. Carmen Villalba, Alcides Oviedo and Aldo Meza are
members of the same leftist party, Patria Libre (PPL),
believed to be responsible for the more recent kidnapping and
murder of former President Raul Cubas' daughter, Cecilia
Cubas. Four other suspects in the Debernardi case remain at
large, including Juan Arrom and Anuncio Marti, PPL leaders
who were granted refugee status in Brazil after they were
allegedly tortured by police in Paraguay.

INL-funded drug dog nets 32 kilos of marijuana in CDE
-------------- --------------

10. (U) On April 28, an INL-funded Anti-Narcotics Secretariat
(SENAD) canine unit detected 32 kilograms of marijuana during
a routine check of a Sao Paulo-bound bus near the Friendship
Bridge connecting Ciudad del Este to Foz do Iguacu, Brazil.
The bus originated from Asuncion. Kilo, one of SENAD's drug
dogs, discovered the marijuana in two backpacks and one large
bag belonging to two young men from Caaguazu, Paraguay.
SENAD agents arrested the individuals and placed them in a
local jail until their trial date is set.
KEANE