PARAGUAY: DUARTE SHAKES UP CABINET AS POLLS SHOW

UNCLAS SECTION 01 OF 02 ASUNCION 000670

SIPDIS

SENSITIVE

STATE PASS TO USAID (LAC/AA)
SOUTHCOM FOR POLAD DAN JOHNSON
NSC FOR KIM BREIER

E.O. 12958: N/A
TAGS: PGOV PREL PINR PA
SUBJECT: PARAGUAY: DUARTE SHAKES UP CABINET AS POLLS SHOW
DECLINING SUPPORT FOR HIS ADMINISTRATION

REF: A. ASUNCION 00627 AND PRECEDING

B. ASUNCION 00589 AND PRECEDING


1. (U) Summary: On May 14, President Nicanor Duarte Frutos
sacked Health Minister Julio Cesar Velazquez, who in recent
months has been campaigning to become Colorado (ANR) party
president. Duarte appointed someone with a more technical --
i.e., less political -- background to replace him. Duarte
reportedly also asked Minister of Labor and Justice Juan
Dario Monges and Minister of Defense Roberto Gonzalez to
resign so that they could dedicate themselves to their
respective campaigns for the ANR presidency. Monges will
likely step down soon. Gonzalez apparently chose instead to
give up or delay aspirations to preside over the party. The
ouster of Velazquez and likely ouster of Monges come on the
heels of several polls showing declining support for the
Duarte administration. In a surprise, unrelated development,
Minister of Finance Dionisio Borda resigned May 19 (septel to
follow). Foreign Minister Leila Rachid will also leave this
summer. End Summary.

Health Minister Sacked
--------------

2. (U) On May 14, President Nicanor Duarte Frutos sacked
Health Minister Julio Cesar Velazquez. His removal followed
a controversy over an inquiry into his administration of
funds and projects as the former Mayor of Fernando de la Mora
(ref B),complaints about his performance as Health Minister,
and complaints that his recent focus on party politics
distracted him from running the Ministry. (Note: In recent
months, Velazquez has been campaigning to become ANR party
president. He also served as the head of a committee
exploring the possibility of a Constitutional reform that
would permit the President of Paraguay to run for re-election
(refs A and B). End Note.)


3. (U) Commentators suggest that Velazquez "was pushed after
he refused to jump." Velazquez's own assertions that he
turned down other positions that Duarte offered him support
such an assessment. Duarte offered faint praise for
Velazquez's performance as Health Minister, and cited a need
for someone "more technical, less political" as the reason
for his decision to replace him.


4. (SBU) Comment: Velazquez's removal puts into play the
votes and support of his strong ANR following in the populous
Central Department. Despite leading the on-again, off-again
bid for a Constitutional reform that would enable Duarte to
seek a second term, Velazquez would like to succeed Duarte as
ANR candidate for President should such a bid fail. Many
commentators assert that Duarte removed Velazquez because he
posed too much of threat to Duarte's leadership, rather than
for his performance in office. Velazquez will likely attempt
to forge an alliance to challenge Duarte in the ANR's
upcoming internal elections. Commentators suggest that such
an alliance might include backers of Goli Stroessner,
grandson of former dictator Alfredo Stroessner. The younger
Stroessner recently revealed his own political aspirations,
to the dismay of many in Paraguay, but with a name still
revered by others. End Comment.

Technocrat Appointed to Take Over Ministry
--------------

5. (U) Duarte appointed Maria Teresa Leon Mendaro to replace
Velazquez. Leon is a 54-year-old pathologist and professor
who moved up through the Health Ministry ranks from director
of a dispensary in Caacupe to head of the Ministry's
epidemiology department. She is credited with spearheading a
successful campaign to combat dengue fever, and served as one
of Velazquez's technical advisers.


6. (U) Upon accepting her new appointment, Leon pledged to
improve services in the Ministry's hospitals and the
effectiveness of its staff, and signaled her desire to
enhance cooperation among practitioners working in the
country's various health care institutions. Delivering on a
pledge to de-politicize the Ministry's key staff, she
immediately reinstated technical experts to senior leadership
positions that Velazquez had filled with political allies.


7. (SBU) Comment: The Ambassador and USAID Mission Director
will call on Leon as soon as possible to discuss issues such
as a proposed World Bank loan for the Ministry, the new
Minister's reported plans to focus on reproductive health
care, and a program started under a previous Minister to
decentralize the Ministry's budget process. The
decentralization program permitted some health care
institutions to collect fees for services and empowered local
authorities to determine how best to utilize the fees
collected. Post will report on the meeting septel. End
Comment.

Two Other Ministers Asked to Resign
--------------

8. (SBU) Duarte reportedly also asked Minister of Labor and
Justice Juan Dario Monges and Minister of Defense Roberto
Gonzalez to resign. They, too, have been campaigning for the
ANR party presidency over the past few months. Monges told
the press that he would step down "before the end of the
year," but there is intense speculation that he will depart
as early as the end of this week. Press reports indicate
that Duarte has selected ANR Deputy Mario Morel Pintos to
succeed Monges, and that Morel will be sworn in May 20.
(Comment: Not surprisingly, Morel also hails from Central
Department. Appointing him to replace Monges could mitigate
the negative impact for Duarte of removing Velazquez. End
Comment.) Gonzalez, on the other hand, apparently chose to
give up or delay his aspirations to preside over the party
and will remain at the Ministry of Defense for the
foreseeable future.

Polls Show Declining Support for Administration
-------------- --

9. (U) The ouster of Velazquez and likely ouster of Monges
come on the heels of several polls showing declining support
for the Duarte administration. An April 2005 COIN
Consultancy poll showed that Duarte's approval rating (i.e.,
the number of respondents who rated his performance in office
as "good" or "excellent") had fallen to 13.6 percent, down
from 22.9 percent in April 2004, and down from the 37 percent
of the popular vote Duarte received in the April 2003
presidential election. Duarte's disapproval rating (i.e.,
the number of respondents who rated his performance as "bad"
or "very bad") rose from 35 percent in April 2004 to 40.6
percent in April 2005. According to the COIN organization,
respondents in the April 2005 poll still believe Duarte has
good intentions, but they are increasingly frustrated by the
lack of concrete measures to address unemployment, corruption
and public safety.


10. (SBU) A separate April 2005 poll, conducted by a company
called First, gauged opinions towards the members of Duarte's
cabinet. Of the three Ministers who were asked to resign,
Velazquez actually received the highest approval rating (35.3
percent) and Gonzalez the lowest (21.4 percent). Gonzalez
was also dead last among the ten Ministers rated in the poll,
whereas Velazquez was fourth overall. (Comment: The results
of the First poll support the assertion that Duarte removed
Velazquez because he posed a threat to Duarte's leadership,
rather than for his performance in office. Gonzalez, on the
other hand, may be hanging on because he is a personal friend
of the President. Some suggest that his position also would
be more difficult to fill than Velazquez's. End Comment.)

Other Departures
--------------

11. (U) In a surprise move May 19, Minister of Finance
Dionisio Borda announced his resignation (see septel).
Foreign Minister Leila Rachid will also leave this summer, as
has been expected.
KEANE