PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 2-8

UNCLAS ASUNCION 000883

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 EFIN AFIN
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 2-8

REF: A. ASUNCION 226

B. ASUNCION 813

1.(U) Summary
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-- President Duarte Encounters a Polarized Congress
-- TIP Suspect Extradited from Spain
-- Ministry of Finance to Combat Corruption

President Duarte Encounters a Polarized Congress
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2. During the first official session under new Senate
leadership (ref B),President Duarte delivered the State of
the Nation Address to Congress on July 1, emphasizing his
administration's achievements and assessing what still needs
to be done. The President pledged to continue his battle
against crime, specifically noting his commitment to fight
terrorist financing. (Comment: It is rare for the President
to officially acknowledge that financing of terrorism occurs
in Paraguay. End Comment.) President Duarte's speech also
called on the US Government to open its markets to Paraguayan
meat products. (Comment: Emboffs have advised the GOP in the
past that the only barrier to importing beef is compliance
with US sanitary regulations, pointing to Uruguay as proof.
Emboffs will stress that point in upcoming meetings with
administration officials. End Comment.) The opposition to the
new leadership in Congress, consisting of the Authentic
Radical Liberal Party (PLRA),the Beloved Fatherland Party
(PPQ),and the National Union of Ethical Citizens (UNACE)
party, refrained from attending the July 1 session. The
opposition leaders accused President Duarte of interfering in
legislative matters to promote the election of new Senate
President, Carlos Filizzola, of the socialist Country in
Solidarity Party (PPS),adding that they did not want to hear
his "hypocritical" speech.


3. The opposition bloc also confirmed their decision not to
head any of the committees during the 2005-2006 legislative
period. Senators from ruling Colorado Party (ANR) will head
10 of the 14 Senate committees and four dissident opposition
Senators, who have formed a pact with the ruling Colorado
Party, will head the remaining committees. Of the four
principal committees, ANR will preside over three: Finance
and Budget, Legislation and Coding, and Foreign Relations.
The National Encounter Party (PEN) will head the
Constitutional Affairs Committee. (Comment: The opposition is
bitter about being outmaneuvered by the Colorados for control
of the Congress and threatens to undermine the Colorados'
legislative agenda. End comment.)

TIP Suspect Extradited from Spain
--------------

4. (U) The Director of the Ministry of Women, Graciela
Zelayla, informed post that Ms. Carolina Maidana Duarte was
extradited from Spain into GOP custody on July 1 for her
involvement in the trafficking of Lurde Resquin to Spain. In
December 2004, Ms. Maidana,s brother, Raul Antonio Maidana
Duarte, and Mario Ramon Gonzalez Caceres, were convicted for
their involvement in the trafficking of this same women.
(Note: Post has learned that this conviction was overturned
on appeal in April 2005 by a vote of 2-1 on the grounds that
the defendants should be tried in Spain where the trafficked
woman suffered the ultimate effects of the crime. The
decision to overturn the conviction by the Appellate Court
will come up for review by the Supreme Court,s Penal Court.
Post intends to raise this case with the Supreme Court. End
Note.)

Ministry of Finance to Combat Corruption
--------------

5. (U) On June 23, Finance Minister Bergen approved creation
of an internal investigation unit to combat corruption in all
agencies of the Ministry of Finance. The unit compliments
other entities created in the National Anti-drug Secretariat
(SENAD),Customs, and the Ministry of Industry and Commerce
to investigate predicate offenses contributing to money
laundering and terrorist financing.
KEANE