PARAGUAY POLITICAL AND ECONOMIC UPDATE, MAY 14-20

UNCLAS SECTION 01 OF 02 ASUNCION 000681

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: N/A
TAGS: PGOV PREL PINR SNAR ETRD EPET KCRM VE PA GTIP
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, MAY 14-20

REF: A. ASUNCION 487


B. ASUNCION 649


1. (U) Summary:
--------------
-- Paraguay to import Venezuelan oil?
-- Paraguay establishes relations with Bahrain
-- Paraguay to repatriate 29 women from Argentina
-- Additional drug busts in Paraguay

Paraguay to import Venezuelan oil?
--------------

2. (U) On May 12, the Senate ratified an energy agreement
with Venezuela through which Paraguay would be able to import
18,600 barrels of Venezuelan crude oil per day. The one-year
agreement was signed by Presidents Duarte and Chavez in
November, and permits Paraguay to pay 75 percent upon
delivery and the remainder over 15 years at a 2 percent
interest rate (ref A). The GOP has argued that the
arrangement offers Paraguay the opportunity to invest in
social programs by paying with credit, as well as the
prospect of exchanging crude oil for agricultural and meat
products. However, Paraguay's state-owned oil company has
said the ratification comes too late to arrange a deal in the
short term, given solicitations already issued.

Paraguay opens relations with Bahrain; VP to Israel
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3. (U) On May 14, the Foreign Ministry announced that
Paraguay established diplomatic relations with Bahrain. This
is the second new bilateral agreement Paraguay has signed
since Mercosur established a new framework agreement for
economic cooperation with Arab states during the recent
Arab-South American Summit in Brasilia (ref B).


4. (U) Separately, the press reported on May 16 that
Vice President Castiglioni will visit Israel in late August
or early September. According to Israel's Honorary Consul to
Paraguay, Max Haber, this will be the first time that a
Paraguayan president or vice president visits Israel, despite
55 years of diplomatic relations.

TIP: Paraguay to repatriate 29 women from Argentina
-------------- -


5. (U) Paraguay's Ambassador to Argentina Orlando Fiorotto,
Argentina's Ambassador to Paraguay Rafael Edgardo Roma, and
Paraguay's Director of the Rapatriation Office Nicasia
Maldonado met in Asuncion to discuss proceedings in the case
of 29 Paraguayan females -- of which two are minors -- who
had been tricked into prostitution and were discovered
several weeks ago in Cordoba during a roundup of brothels.
Maldonado will travel to Cordoba to prepare the ground for
their return to Paraguay. Fiorotto stressed the importance
Paraguay attaches to investigation of this case and
prosecution of those parties involved.

Additional drug busts in Paraguay
--------------

6. (U) On May 15, during a joint raid on a ranch in Itanara,
Candindeyu, agents from the National Anti-drug Secretariat
(SENAD) and the Brazilian Federal Police seized 414 kg of
pressed marijuana. Authorities arrested a Paraguayan
national, Osvaldo Rodriguez, and three Brazilians: Vicente
Alero Filho, Moises Dos Santos, and Alexander Pereira da
Silva. Local press reported that the marijuana belonged to
Brazilian drug trafficker, Ubirata Brescobist, who is
currently suspected to be moving between Candindeyu and
Amambay departments.


7. (U) In a separate case, Paraguayan and Brazilian
authorities conducted a joint operation that resulted in the
seizure of approximately 7.5 tons of marijuana in Ponta Pora,
Brazil, on May 16, leading to the arrest of at least five
Brazilian drug traffickers. During the operation, authorities
intercepted two trucks concealing packages of marijuana
shipped from the mountains of Amambay and intended for
Brazil's markets.


8. (U) On May 10, one of the SENAD detector dogs, Bonita,
discovered 995 grams of cocaine concealed in a shipment of
backpacks from Ciudad del Este en route to Cameroon (ref B).
The drugs were hidden inside metal backpack frames, each
backpack containing around 90 grams of cocaine. SENAD agents
along with two prosecutors thoroughly searched the shipment
and took photographs of the backpacks. This week,
authorities arrested one individual in Ciudad del Este
suspected of mailing the package and continue to search for
another involved in the case. On May 19, SENAD officers in
CDE confiscated five kilograms of cocaine and arrested a
Nigerian national. The arrestee is suspected of shipping the
cocaine found on May 10.
KEANE