PARAGUAY: CODEL DISCUSSES TERRORIST FINANCING,

UNCLAS SECTION 01 OF 02 ASUNCION 000090

SIPDIS

STATE WHA/BSC
STATE PASS TO USAID LAC/AA
NSC FOR MIKE DEMPSEY
SOUTHCOM FOR POLAD DAN JOHNSON

E.O. 12958: N/A
TAGS: PGOV PREL PTER SNAR EFIN ETRD PA
SUBJECT: PARAGUAY: CODEL DISCUSSES TERRORIST FINANCING,
NARCOTICS, CORRUPTION, REFORM AND TRADE WITH SENATORS AND
PRESIDENTIAL ADVISORS

REF: ASUNCION 77


1. Summary. On 1/11 Senators Dodd, Chaffee, and Nelson
toured Ciudad del Este (CDE) and visited the Itaipu
Hydroelectric Dam. On 1/12, they met with President Duarte
(see reftel),Paraguayan Senators and Presidential Advisors.
In their meeting with Senators, CODEL Dodd registered its
concern over terrorist financing; the Paraguayan Senators
requested the U.S. provide it with radars to combat drug
trafficking. Sen. Dodd's comments to the press on this issue
following the meeting drew wide coverage and some backlash
from some commentators complaining about a lack of evidence.
The CODEL's meeting with GOP advisors focused on reform and
trade. End Summary.

CODEL Visits CDE, Itaipu Dam
--------------


2. On 1/11, Sen. Dodd (D) of Connecticut, Sen. Chaffee (R)
of Rhode Island, and Sen. Nelson (D) of Florida toured Ciudad
del Este, visiting the Friendship Bridge connecting Paraguay
with Brazil where they observed the massive movement of
people and goods between the two countries and spoke to
Customs and Immigration officials. Paraguayan officials
complained about the lack of resources at their disposal to
tackle the problems they face and appealed for assistance;
Dodd noted the possibility of better utilization of the
resources they currently have. Earlier in the day, the CODEL
received a tour of the facilities at the Itaipu Hydroelectric
Dam, noting its importance to Paraguay on a variety of levels
both political and economic.

Meeting with Paraguayan Senators on Terrorist Financing and
Counter Narcotics
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3. On 1/12, CODEL Dodd met with Paraguayan Senate leaders
from a number of political parties. Sen. Dodd stressed the
importance the U.S. attaches to GOP efforts to counter money
laundering, drug trafficking and terrorist financing. He
registered concern about terrorist financing, particularly in
view of illicit activity the delegation observed in CDE.
Sen. Bade Rachid of the Colorado Party complained that U.S.
charges regarding this problem are on occasion too broad and
unsupported. He conveyed his hope that the visit by the U.S.
Senators could produce something concrete, urging they find a
way to provide Paraguay with four radars to monitor and
combat the movement of narcotics flights over Paraguay. He
suggested these radars might be available among excess goods
no longer used in the wake of U.S. base closures.

Meeting with Presidential Advisors
--------------


4. Before its departure on 1/12, CODEL Dodd met with a
number of advisors from President Duarte's economic team,
stressing U.S. support for efforts to combat corruption and
implement economic reform. Presidential Advisor Walde
described the need for a transformation in the Paraguayan
cultural mindset for its efforts to reform and combat
corruption to become sustainable. He appealed to the U.S. to
open its markets to Paraguayan goods, in particular garments
and organic sugar, flagging as significant and positive the
economic impact this opportunity would avail Paraguay. Walde
also noted that the GOP plans to sign an Open Skies agreement
as one part of a broad strategy to make Asuncion an air hub,
promote new exports, and bring in tourists. Minister of
Trade and Commerce Ernst Bergen stressed the IPR fight.
Minister of Finance (MOF) advisor Fernando Massi elaborated
on reform achievements described by the President (reftel).
MOF advisor Diego Abente noted the long-term GOP reform plan.
Sen. Dodd praised the reforms, urging the GOP to build
public support as the process continues, since great ideas
were bound to fail in a democracy if not sold to the people.

Press Coverage
--------------


5. Sen. Dodd's comments to the press received wide coverage
with most focusing on the concerns conveyed regarding the
flow of funds to terrorist organizers. Some commentators,
including the Mayor of Ciudad del Este and a congresswoman
from the region, complained about the lack of evidence the
U.S. provides to support its claims regarding terrorist
financing. On a positive note, Senate President Carrizosa
conveyed publicly that he shared some of U.S. concerns on
this matter and flagged the need for Paraguay to step up its
efforts to address the problem. Charge answered some of the
critics in a live radio interview 1/14, noting that U.S.
concerns were not new, and are part of worldwide efforts
against terrorist funding.


6. CODEL departed before having the opportunity to clear
this cable.


KEANE