PARAGUAY REJECTS IMMUNITIES FOR U.S. MILITARY

S E C R E T ASUNCION 001020

SIPDIS

SIPDIS

NSC FOR SUE CRONIN
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 10/03/2026
TAGS: PREL MASS KICCPUR PTER PINR BR VZ AR PA
SUBJECT: PARAGUAY REJECTS IMMUNITIES FOR U.S. MILITARY
EXERCISES

REF: A. ASUNCION 915

B. STATE 141911

Classified By: PolCouns James P. Merz; Reasons 1.4(b),(d)


1. (C) SUMMARY. FM Ruben Ramirez confirmed October 2 press
reports that Paraguay had decided to reject A&T status for
U.S. participants in military exercises proposed for 2007.
He told the Ambassador that the decision had been made on the
basis of legal and political considerations. The Ambassador
pointed out that Paraguay extends to Argentina and Brazil the
same kinds of protections we seek. He also noted that a
number of countries throughout South America extend the U.S.
these protections. We made it clear we were prepared to be
flexible in exploring a formula to continue the exercise and
retain the protections, including possibly working off the
Brazilian agreement as a model. Ramirez signaled interest in
trying to find a way to continue military cooperation on
mutually acceptable terms but needed to consult with the
President regarding viable options. Meanwhile, an advisor to
the Vice-President (strictly protect) told the Ambassador
that Argentina had offered Paraguay $4.5 billion in debt
relief, among other things, if it ended military exercises
with the U.S. END SUMMARY.

Who Said What and When?
--------------

2. (C) Left of center newspaper Ultima Hora published an
article October 2 reporting former FM Rachid had told A/S
Shannon in August, on instructions from President Duarte,
that Paraguay had decided to reject extending immunities to
U.S. participants in military exercises proposed in 2007.
(NOTE: The MFA has been reviewing since July a draft
agreement that we sent them that would extend A&T status
consistent with the Vienna Convention to U.S. participants in
military exercises proposed for 2007. END NOTE.) The
article also reported that Shannon informed Rachid that the
U.S. would not be able to continue the exercises without the
protections. Subsequently, FM Ramirez confirmed publicly
that Paraguay had taken this decision based on its conclusion
that the Vienna Convention precluded extending privileges to
anyone other than diplomats and that Paraguay was the only
country in the region that extended such protections to U.S.
participants in military exercises. He insisted Paraguay
was committed to maintaining strong relations with the U.S.


3. (C) Per Department's report (ref B) on Rachid's meeting
with A/S Shannon on August 18, Rachid sought U.S. flexibility
on the question of immunities but at no point asserted
Paraguay had decided to reject diplomatic immunities.
Subsequent to the Rachid's U.S. visit, the Ambassador met
with President Duarte September 4 (ref A) making the case for
the exercises and defending the language on immunities.
Duarte never advised the Ambassador he had already decided to
reject the immunities. To the contrary, he agreed to support
the exercises and said he would rally Colorado congressmen in
an effort to meet the Ambassador's 20 day deadline for moving
forward. On repeated occasion, MFA U/S for Bilateral
Affairs Ceferino Valdez told PolCouns FM needed to consult
with the President on next steps for how to draft language in
our agreement on immunities. He never suggested nor implied
that the MFA had already decided to reject immunities.

Where Do We Go From Here?
--------------

4. (C) FM Ramirez told the Ambassador October 3 that
Paraguay had decided to reject extending immunities to
participants in military exercises on legal and political
grounds. First, he maintained the Vienna Convention
precluded the extension of A&T status to participants in
military exercises. Second, he asserted the proposed
agreement would not pass in the opposition controlled
Congress. The Ambassador roundly debunked both points. He
pointed out that the U.S. had Status of Force Agreements with
some 80 countries around the world, including many in Central
and South America. Further, Paraguay extended A&T status to
Argentina and Brazil in the context of agreements on military
cooperation it signed with those countries originally in

1995. On the question of political support for the
agreement, he informed the Foreign Minister that we had
lobbied the opposition and were confident there was
sufficient support to adopt the agreement.


5. (C) The Ambassador made it clear the U.S. is committed
to continued military cooperation with Paraguay. President

Bush had just signed off on an APSA waiver that would allow
the U.S. to reextend IMET to Paraguay; an ESF waiver for
Paraguay was also in the works and Congress had approved $1.1
in PKO support funds. On our military cooperation agreement,
we were prepared to be flexible on the framework including
working off the Brazilian agreement as a model. We could
also look at attaching participants to the our Mission in
Paraguay. However, we needed to know if the GOP had the
political will to look for a solution or if had decided to
kowtow to its neighbors pressuring it to cut back on military
ties to the U.S. Ramirez signaled he would like military
cooperation to continue but would need to consult with
President Duarte to see if it would be possible to overcome
the government's announced predisposition against extending
immunities. The external pressures on Paraguay, he
suggested, were enormous.

The $4.5 Billion Dollar Answer?
--------------

6. (S) Vice-Presidential advisor Juan Facetti (strictly
protect) told the Ambassador seperately the same day that
President Duarte's decision on the exercises flowed from
Argentine pressure. According to Facetti, Argentine
President Kirschner met with Duarte in September at the UNGA
in New York and offered Paraguay $4.5 billion in debt relief,
among other conditions, if Paraguay agreed to end its
military cooperation with the U.S. Argentina, said Facetti,
was explicitly behind this in coordination with the
government of Venezuela. (NOTE: Paraguay is seeking to
renogiate the terms of debt, extending through to 2023,
associated with construction of the Yacyreta Hydroelectric
Dam.) Facetti believed this offer had compelled Duarte to
reject continued U.S. military cooperation and maintained the
President's office was the source for the leak leading to the
recent press reports on this issue. It is worth noting FM
Ramirez cut short his stay in New York in September during
the UNGA, including canceling a meeting with A/S Shannon, on
the pretext he needed to prepare for negotiations with
Argentina the following week.

Mixed Political Response
--------------

7. (C) Several leftist opposition Congressmen opposed to
any military exercises with the U.S. applauded the
announcement charging the language on protections had
represented an affront to Paraguay's sovereignty. However,
several key opposition Senators including Sen. Miguel
Saguier, President of the Senate Defense and Constitutional
Affairs Commission, and Carlos Mateo Balmelli, a candidate
for President in 2008, criticized Duarte for bowing to
pressure from his neighbors in the region. If nothing else,
their public criticism put to the lie the notion the
opposition would categorically reject the exercises with the
U.S.


COMMENT
--------------

8. (S) We may never know exactly when Duarte took his
decision to reject extending immunities and why. The notion
that Argentina offered a compelling financial incentive in
September at the UNGA is conceivable but doesn't square
entirely with the suggestion Rachid had been sent to give us
the President's decision back in August. We have no doubt
Paraguay is under pressure from its neighbors to cut back on
military cooperation with the U.S. Brazil is seeking to
expand its own military assistance with Paraguay. Meanwhile,
Venezuela has signed agreements with Paraguay extending
concessional terms on fuel sales.


9. (C) We have conveyed our readiness to be flexible in
exploring a mutually satisfactory solution that will afford
the protections we need. The MFA has conveyed a desire to
continue cooperation and we know that sentiment is genuinely
shared by Vice-President Castiglioni and the Armed Forces.
However, it will be difficult for Duarte to climb down from
his public stance of rejecting the extension of immunities
tied to the exercises particularly in the face of pressure
from his neighbors. An interesting dynamic that may bode in
our favor is the fact that the five-year duration Brazilian
and Argentinan agreements are coming up for renewal this
month. Duarte's government will be hard-pressed to explain
publicly how it can extend the same protections to Brazil and
Argentina that it found unacceptable in the U.S. draft
agreement. This could potenially create an opening for U.S.

supporters to argue the U.S. be afforded comparable
protections.
CASON