PARAGUAY: AMBASSADOR CALLS ON NEW SENATE

C O N F I D E N T I A L SECTION 01 OF 03 ASUNCION 000939 SIPDIS STATE PASS TO USAID FOR LAC/AA NSC FOR SUE CRONIN SOUTHCOM FOR POLAD DAN JOHNSON E.O. 12958: DECL: 07/25/2015 TAGS: PGOV PREL PINR EAID MARR KDEM KWMN PA SUBJECT: PARAGUAY: AMBASSADOR CALLS ON NEW SENATE LEADERSHIP, AG OPINES ON POLITICAL SCENE Classified By: PolOff Mark A. Stamilio, reasons 1.4(b) and (d). Summary -------------- ¶1. (U) On 7/22, the Ambassador called on the new Senate President, Carlos Filizzola, and discussed the pending Millennium Challenge Corporation (MCC) project aimed at improving transparency and legislative effectiveness; legislation to increase citizen participation in government; military exercises scheduled for the next 18 months; the termination of USAID's reproductive health program; and Filizzola's priorities for this year's legislative agenda. ¶2. (C) The Ambassador also called on the new First Vice President of the Senate, Alejandro Velazquez, and the new President of the Senate Foreign Relations Committee, Adriana Franco. Velazquez complained at length about the deterioration of relations between the majority multi-party bloc in Congress and the opposition. Franco asked how to increase openness and cooperation with the USG. The Ambassador responded that cooperation was very good in areas such as counter-narcotics, anti-corruption and counter-terrorism, but that Paraguay needed to improve its performance with respect to enforcing the law, especially on money laundering, and needed to improve its business climate. Both Velazquez and Franco complained that imprisoned UNACE leader Lino Oviedo was seeking to punish them for working with the Colorados by calling in large alleged debts. ¶3. (C) Attorney General Oscar Latorre shared with the Ambassador later that same day his concern that the country's political leadership has embarked on a perilous road toward sterile confrontation. Latorre was also disdainful of two of the reported leading candidates to replace him, describing one as a "bandit" and the other as a farm team criminal hoping to get into the major leagues. End Summary. Meeting with Senate President -------------- ¶4. (U) On 7/22, the Ambassador called on the new President of the Senate, Carlos Filizzola of the socialist Country in Solidarity Party (PPS). Filizzola said he would like to work together whenever possible and strengthen relations with us. He was open to the idea of traveling to the U.S., noting that he has traveled to the U.S. on several occasions and is a member of the Inter-American Dialogue. ¶5. (U) The Ambassador explained the pending Millennium Challenge Corporation (MCC) project aimed at improving transparency and legislative effectiveness, and stressed the need for Paraguay to take ownership of the proposal and refine it for final presentation in Washington in three months. Filizzola voiced general agreement with the project. He added that the Congress was working with the Inter-American Development Bank and the World Bank on similar projects, and that the newly appointed projects coordinator for the Congress, Marializ Sosa, would work to ensure continuity. The Ambassador said that he would have the USAID Country Director get in touch with Sosa. ¶6. (SBU) With respect to transparency, Filizzola told the Ambassador that he would push for legislation to increase citizen participation in government through public hearings. He noted that he had done the same as mayor, passing ordinances that gave constituents access to public records and a voice in the budget process through public hearings. When the Ambassador inquired whether the Senate would open the Puerto Casado (Moon Sect) land expropriation debate to public hearing, Filizzola said there had already been a debate on it early in the year, and focused instead on the government taking a greater role in resolving the rural crisis through technical assistance and credit, typical PPS demands. Additionally, he argued that 52,000 hectares was a drop in the bucket for Victoria SA, the Moon Sect company that owns the land, and that expropriation was a "rational" solution to the crisis since it would generate employment in the zone "without affecting Victoria's investment." (Comment: It was clear that Filizzola would not be swayed that expropriation would have longer term negative effects on investment throughout Paraguay. End Comment.) ¶7. (U) Filizzola raised the issue of military exercises, assuring the Ambassador that the new Congress would respect the previous Congress's decision to approve our request for immunities and permission for U.S. military personnel to enter the country for a series of routine medical and training exercises that will take place over the course of the next 18 months. Filizzola opined that the recent debate over the issue was merely a reaction to the length of the period in question. ¶8. (U) The Ambassador explained that USAID would terminate its family planning program in Paraguay since USAID in Washington is shifting funds to Africa, which means that USAID will no longer provide contraceptives for distribution in Paraguay. USAID currently provides 95 percent of the contraceptives distributed, the Ambassador noted, hoping that the GOP would develop a plan to provide needed services. Filizzola, a medical doctor, voiced agreement with the aims of the USAID program, and stated that he had presented a bill on sex education and family planning. He agreed that it would be beneficial for USAID and the Paraguayan commission involved in family planning to coordinate as USAID turns the reins over to the GOP. ¶9. (U) In response to the Ambassador's question, Filizzola listed the following as his priorities for the legislative agenda: -- Health issues, such as reproductive health -- Protection of women and children, and victim assistance programs -- Reform of the public banking law -- Social issues, such as employment and poverty -- Decentralization of government -- Anti-corruption legislation, such as illicit enrichment and influence peddling laws and whistleblower protection Senate First Vice President -------------- ¶10. (C) Immediately after their meeting with Senator Filizzola, the Ambassador called on Senator Alejandro Velazquez of the National Union of Ethical Citizens (UNACE) party in his capacity as the new First Vice President of the Senate. Prompted only by an inquiry as to how things were going, Velazquez meandered for 45 minutes through complaints that the atmosphere in the Congress was "conflictive" and "destructive" with the opposition threatening to deny a quorum any time a majority legislator even "went to the bathroom." Velazquez also confided that a group of Senators who "do not accept Filizzola's presidency" had approached him about taking over as Senate President, but that he declined their offer and would "respect the institution." ¶11. (C) At the end of the meeting, Velazquez produced a suitcase full of cash (local currency equivalent of USD 120,000) that he was going to take to Oviedo supporter and owner of Paraguay's largest daily Aldo Zuccolillo. Velazquez claimed Oviedo was threatening legal action over alleged debts against him and others from UNACE cooperating with the Colorado Party. Oviedo's attempt at intimidation would fail, he concluded. (Note: Velazquez' story on the debt was opaque and confusing, but he claimed Oviedo was simply trying to smear those who abandoned him. It was not clear why he was paying Zuccolillo. End Note.) President of Senate Foreign Relations Committee -------------- -- ¶12. (C) Following their meeting with Velazquez, the Ambassador called on Senator Adriana Franco in her capacity as the new President of the Senate Foreign Relations Committee. (Note: Franco recently left UNACE and returned to the ruling Colorado party, something Velazquez had done de facto but not formally. At the end of the meeting, concerned that she had made a "grave mistake" in leaving UNACE, Franco asked whether the Ambassador had information on whether jailed UNACE leader General Lino Oviedo might harm her. Like Velazquez, she claimed Oviedo was threatening her over debts. The Ambassador told her that we did not have any such information, but that it appeared Oviedo was under tight military control. End Note.) ¶13. (C) Franco professed her love for the U.S. as the only hope against the leftists ("socialists and communists") that surround Paraguay in Latin America, and strong pressure from Mainland China. She asked for increased openness and cooperation with the USG, rating current relations with us a "7" on a scale of 1 to 10 and hoping that we could get to a "10". ¶14. (C) Franco also asked what Paraguay needed to do to achieve the goal of getting to a "10". The Ambassador noted that cooperation was very good in areas such as counter-narcotics, anti-corruption and counter-terrorism, but that we needed to see progress in important areas such as money laundering; and that first and foremost Paraguay needed to enact new anti-money laundering legislation. The Ambassador stressed the importance of not creating the appearance that such legislation was a U.S.-led project. Attorney General's Observations -------------- ¶15. (C) Attorney General Oscar Latorre, one of the more astute and sober observers of the local political scene, shared with the Ambassador later that same day his concern that the country's political leadership has embarked on a perilous road toward sterile confrontation which could set back many of the gains made during the last few years in a number of fields. It will be difficult, he said, for the Executive to make significant legislative advances. Populist measures will become harder to resist and short-term political calculations -- looking toward the upcoming electoral calendar -- may undermine some of the progress made and the plans for additional reforms in strengthening institutions, including what he described as the unique opportunity presented by the MCC Threshold Program. ¶16. (C) Latorre believes the President should have made a serious effort to bring together the key party leaders to work out a modus vivendi for another two years, until the municipal elections, when cutthroat competition would become inevitable. He expressed concern that the President will "make a fatal mistake" if he chooses a new Attorney General based principally on political expediency or for other unspeakable motives, because it would polarize the country and the three significant opposition parties would be joined by the private sector and many other societal groups in confronting Duarte and the Colorado party. (Note: Latorre's term expires in one month.) Latorre likened the current Congressional President, Socialist Carlos Filizzola, to "road kill" the day he steps down 11 months from now because he blatantly sold out to attain his current position. This severely limits his maneuvering room as Congressional President. ¶17. (C) Latorre was disdainful of two of the reported leading candidates for the AG slot, describing one (Ruben Candia) as a "bandit", and the other (Ruben Romero) as a farm team criminal hoping to get into the major leagues. Latorre said he warned Duarte Frutos about his concerns and suggested that he (Latorre) be appointed for another term even though they both know Latorre has to take medical leave for a while, since it would give Duarte more time to find a good replacement when/if Latorre must resign for health reasons. Latorre noted that the only current prosecutor who he thinks has the stuff to be an honest and successful AG is Edward Irala, currently the Assistant Fiscal for the Department of Itapua (Encarnacion). ¶18. (C) Comment: Latorre's remarks are self-serving, but in general they square with our own observations of current troubling trends. Latorre reportedly has cancer, although he did not admit it, and he avoided discussing his health except to say that he is going to Sao Paulo for some examinations. The AG position is probably the second most powerful job in the country. He is independent from the other three powers and, as Latorre noted, has information or can collect information that can destroy almost anyone in Paraguay. KEANE