PARAGUAY: VP CASTIGLIONI DISCUSSES SECURITY

C O N F I D E N T I A L SECTION 01 OF 04 ASUNCION 000875

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 SUE CRONIN
TREASURY FOR OSIA MAUREEN WAFER
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR
COMMERCE FOR ITA SARAH COOK
SOUTHCOM FOR POLAD DAN JOHNSON
USUN FOR NICK ROSTOW

E.O. 12958: DECL: 06/27/2015
TAGS: PGOV PREL PTER KCRM EAIR ECON CVIS VE CU PA UN
SUBJECT: PARAGUAY: VP CASTIGLIONI DISCUSSES SECURITY
COOPERATION, MONEY LAUNDERING AND COUNTER TERROR
LEGISLATION, VISAS, OPEN SKIES, AIRPORT SOLICITATION, CUBAN
DOCTORS, VENEZUELA

Classified By: Polcouns James P. Merz for reasons 1.4 (b) and (d).


1. Action request: State/USUN see paras. 2 and 7.


2. (C) Summary and Action Request. On 6/30, Ambassador met
with Vice President Castiglioni to discuss his recent trip to
the U.S. The Ambassador stressed the need for progress on
money laundering and counter terrorism legislation. Post
requests Department and USUN consider how we can bring more
international (not U.S.) pressure to bear upon Paraguay to
this end. (See para. 7) Castiglioni was optimistic about
prospects for lifting the current visa requirement for
Amcits. He was pleased with the benefits derived from recent
adoption of the Open Skies agreement and touted an upcoming
solicitation on improving Asuncion's airport. He confirmed
reports that many Cuban doctors seek refugee status in
Paraguay and shared concern about Venezuela's meddling in the
region. End Summary and Action Request.

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U.S. Trip Outstanding
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3. (C) Castiglioni expressed appreciation for the quality
of meetings he had with high-level officials including
Vice-President Cheney, the SECDEF, CIADIR, DEPDIR FBI, A/S
WHA, CHDS Director, and other senior officials from Defense,
State, and Homeland Security. He recognized that the
Washington schedule was exceptional. He considered it
emblematic of strong U.S.-Paraguayan cooperation on security
issues. He was enthusiastic about the benefits to be derived
from the creation of ICE's trade monitoring module, conduct
of CHDS's high-level seminar on developing a national
security plan, and anti-kidnapping training. He was hopeful
about prospects to receive a visit from SECDEF.

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Money Laundering and Counter Terrorism Legislation
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4. (C) The Ambassador stressed the need for progress soon
on money laundering (ML) and counter terrorism (CT)
legislation. UNSCR 1373 imposed upon the international
community the obligation to adopt laws that address the
threat posed by terrorist financing. Paraguay's legal
framework was deficient. Paraguay had come up for criticism
in the UN's Counter Terrorism Committee (CTC) last year in
view of its failure to adopt counter terrorism legislation.
A year later, it had still not introduced draft anti-terror
legislation to Congress, much less adopted and implemented
it. (Note: Post favors approval of a ML before submission of
the more controversial CT law, and is pushing hard on all
fronts. End note) President Duarte will assume the mantel of
UNGA Vice-President in September. It behooved Paraguay to
move aggressively to achieve, at the very least, adoption of
the money laundering law by one of the houses of Congress and
the introduction of the counter terror law to Congress before
September.


5. (C) Comment. Our counsel to the VP -- a bit overplayed
for effect -- about prospects of public criticism of
Paraguay's record upon review by the CTC in September --
produced the desired effect. The Vice-President tasked
Carlos Machuca, the VP's advisor on security issues who had
accompanied him to the meeting, to obtain a full brief on the
legislation. He thought prospects for progress would improve
in the next Congressional session starting in July as
Senators from his party, the Colorados, would assume
leadership of key committees reviewing this legislation. He
promised to engage personally in pressing political allies to
move on the money laundering legislation first. End Comment.


6. (C) Last December, Paraguay received a team of experts
including reps from CTC (Amb. Loizaga),UNODC, CICTE and
UNCHR. They gave Paraguay's CT law a vote of confidence but
registered little impact on the political scene as
Congressmen at the time were focused on budget negotiations.



7. (C) Last month, post participated in a conference call
with reps from UNODC, CICTE, IMF and State (WHA/BSC and SCT)
and came to agreement it was time for the IO community to
bring more pressure to bear on Paraguay to meet its
international obligations. The IO participants agreed that
it would be useful to consider making another trip to
Paraguay sometime between late July and September under the
guise of lending assistance but with the intent to issue
statements in public and private reminding Paraguay of its
obligations. They stressed the importance of bringing the
CTC into this discussion. We agreed to revisit the issue in
July once Paraguay elected new leaders to key Congressional
committees reviewing the money laundering legislation. With
those elections behind us, we intend to reconvene key players
for another discussion of timing for a possible visit.


8. (C) Action request: Post requests the Department and
USUN consider ways to bring more international (non-U.S.)
pressure to bear upon Paraguay. Many opponents of CT
legislation are much more open to U.N. arguments than U.S.
pressure. Post requests consideration be given to the
possibility of prompting the CTC Chairman to write a letter
or at least meet (with Paraguay's PermRep) or make a call to
Paraguayan officials (a call to the VP Castiglioni or the FM
would be ideal if protocol allows) flagging concerns, perhaps
in the context of Paraguay's President serving as VP for the
upcoming UNGA. Raising with officials in Asuncion as opposed
to NY, is more likely to produce results. We welcome other
options as appropriate.

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Dropping the Visa Requirement for Amcits
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9. (C) The Ambassador asked the VP for an update on
Paraguay's plans to drop the visa requirement for Amcits. FM
Rachid had introduced the current requirement when she was
Paraguay's Ambassador to the U.S. We understood immediate
prospects for lifting this policy had dimmed with the
decision that she stay on as Foreign Minister for the
immediate future. Castiglioni maintained that the FM was not
blocking movement on this issue, attributing delays to more
mundane, bureaucratic issues. He promised to look into what
needed to be done to finalize plans to implement a new policy
that would drop the requirement that Amcits obtain a visa in
favor of fee that would be administered upon arrival at the
airport.

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Open Skies
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10. (U) Paraguay signed an Open Skies agreement with the
U.S. less than two months ago. According to the VP, Paraguay
had already started to derive the benefits of the agreement
in the form of lower fares to popular destinations in
surrounding countries and Spain. The Ambassador encouraged
the VP to publicize this information. The government takes
much grief from the uninformed public that such agreements
only benefit rich multinational firms. However, lower fares
benefit everyone, in particular less affluent individuals who
otherwise would not be able to travel by air for a business
meeting or with their family for a vacation.

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Airport Solicitation
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11. (U) The VP confirmed reports that the GOP was moving
ahead in preparing a solicitation for significant
infrastructure improvements, including installation of radar
and modern communication equipment, at Asuncion's
international airport. The government is committed to a
transparent process open to international bids.

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Cuban Doctors
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12. (C) Several months ago, the GOP announced it was
terminating the Cuban doctors program at the end of the year.
The VP also confirmed recent press reports that a fair
number -- he said sixty -- of the doctors have requested to
stay in Paraguay as refugees. (Note: We believe the VP may be
mistaken on the numbers. An MFA source told DCM he thought
there were 6 cases of Cuban doctors seeking to stay. We are
researching further). Many have married Paraguayans, had
children, and opened their own practices in Paraguay. In
Paraguay's interior -- not known for its prosperous or modern
conditions -- they are living better than they were in Cuba.
The VP said the Cuban doctor in his home town in San Pedro is
an example; she has a clinic, a truck, and is "never going
back" he said. Comment. One of Paraguay's leading
newspapers recently produced a series of articles praising
the alleged achievements of the Cuban revolution. The fact
that many of Cuba's doctors do not want to return to Cuba and
seek refugee status here is clearly embarrassing to Cuba and
may explain why Cuba has not registered any public objection
to the GOP's plans to drop its doctors program. Post seeks
to obtain more information on this issue particularly with a
view to bringing it more to the attention of the Paraguayan
public to debunk myths about the Cuban paradise. End
Comment. The VP reiterated that he would also like to end
the sending of Paraguayans to Cuban medical schools. He was
pushing this idea, with the excuse that the GOP could not
afford to transport them, but Cuba then offered to fly them
free. (Note: It is unclear that VP could have delivered on
this, even without the Cuban offer; hundreds of poor
Paraguayans see the scholarship program as a chance for a
better future and this carries political weight. End note)

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Venezuela's Activities
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13. (C) Air Force LtG Soley (please protect) recently
informed the Ambassador that Venezuela had offered to pay for
costs (fuel, housing, etc.) for a visit by classes from
Paraguay's Strategic Studies Institute to Venezuela. The
Ambassador warned Soley that he would be given a dog and pony
show designed to sing the virtues of the "Bolivarian
Revolution." It would be a bad idea for Paraguay to accept
but if it did participants should seek a meeting with the
democratic opposition and independent media. Without
identifying his source, the Ambassador asked the VP for his
views on this issue, expressing U.S. misgivings. The VP was
unaware of the offer, signaled he shared our misgivings, and
assured us he would look into the matter.

14. (C) Comment: Post wants to commend and congratulate
Washington partners for the outstanding schedule it put
together for the VP's visit. Paraguay seeks to strengthen
cooperation with the U.S., particularly in view of rising
security concerns. The VP is a key player on the political
scene in Paraguay. He enjoys a solid relationship with
President Duarte. Given his youth, ambition, and political
acumen, he will surely be a key player on Paraguay's
political scene for the indefinite future. Post has already
cultivated a strong relationship with the VP as someone we
can go to on key issues. The meetings that he had in
Washington solidified that relationship immeasurably. We
expect to see the return on this investment not only in terms
of a stronger personal relationship with the VP, but more
importantly, in the form of deeper cooperation with the U.S.
on key issues including the fight against terror and
international crime and promoting economic trade and
development. End Comment.
KEANE