PARAGUAY POLITICAL AND ECONOMIC UPDATE, FEBRUARY

UNCLAS ASUNCION 000245

SIPDIS

SIPDIS

STATE FOR WHA/BSC AND EB/IFD/OIA
STATE PASS TO USAID FOR LAC/AA
STATE PASS TO USTR FOR 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

E.O. 12958: N/A
TAGS: PGOV PREL PINR KCRM PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, FEBRUARY
25-MARCH 3, 2006



1. (U) Summary:
-- Agriculture Minister Discusses Priorities
-- Police Corruption Alive and Well
-- Ambassador Visits Itapua
-- Ambassador and Attorney General Discuss Priorities
-- Prosecutor Accused of Taking Bribes
-- Ambassador and Mayor Seeking U.S. Scholarships

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Agriculture Minister Discusses Priorities
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2. (U) During the February 22 courtesy call of Ambassador
Cason, Minister of Agriculture Gustavo Ruiz Diaz said that
the Ministry's priority was increasing technical assistance
(TA) to small farmers to increase productivity. He noted that
TA has been insufficient, which has compounded the problems
of the Ministry's historic over-reliance on soil-depleting
cotton as a crop to which it has steered small rural farmers.
Ruiz mentioned success stories with sesame exports and plans
to increase sugar cane production for conversion into sugar,
honey, and then into alcohol as futures areas of export. Ruiz
may travel to Washington in early March and mentioned an
interest in seeking meetings with USDA's Extension Service.
According to Ruiz, the USDA helped establish Paraguay's
extension service 30 years ago, but Paraguay's version has
become ineffective. He would like to discuss ideas for
improving the service, as well as the possibility of
technical assistance from USDA. Econcouns later shared with
the Ministry a copy of the trip report done by CSREES
official James L. Green in 2004 after a visit to Paraguay.
The Ambassador praised Ruiz for finally beginning the
certification process needed to eventually export beef to the
US. He encouraged Ruiz to seek funds, perhaps from Taiwan, to
undertake studies necessary to gain FDA approval of the
natural sweetener Stevia as a food additive.

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Police Corruption Alive and Well
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3. (U) Paraguayan press reported that 3 of the 4 men caught
on 2/27 robbing a police security van carrying 150 million
Guaranies (25,000 USD) were policemen. The van was
transporting the money to a bank from a supermarket. The
robbery led to a shootout in which one of the criminal
policemen was injured.


4. (U) On 3/1, local press published an extensive list of
policemen that were involved in criminal acts over recent
years ranging from narcotrafficking and robbery to homicides
and taking bribes. President Duarte, in a recent interview,
indicated that since he became President, more than 200
policemen have been fired because of corruption or criminal
behavior. Duarte also defended his Chief of Police, Fidel
Isasa, and stating that he will remain in his position.

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Ambassador Visits Itapua
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5. (U) During a 2/23-2/25 trip to the Department of Itapua,
the Ambassador discussed development, tourism, corruption,
trafficking in persons and trade issues with Governor Luis
Viedma Vigo. Governor Vigo was thankful for USAID
assistance and expressed interest in exploring other avenues
to work together, particularly in the area of economic
development. In the city of Fram, the Ambassador discussed
the USAID Healthcare project with Fram Mayor Tatiana Trosciuk
and Dr. Jose Rolon at the local Health clinic. The
Ambassador also visited the UPISA Sausage Factory, located in
Fram, which is a part of USAID's Paraguay Vende Project, in
an effort to promote increased sales and exports, and
therefore increased employment. While in the city of
Encarnacion, the Ambassador promoted tourism and English
education with Mayor Juan Alberto Schmalko. He also met with

Monsignor Ignacio Gogorza, the Bishop of Encarnacion and the
President of the Paraguayan Episcopal Conference (CEP),to
discuss the Catholic Church's views on government and the
country's priorities. Gogorza maintained government
corruption undermined economic development and had a harmful
effect on the cultural behavior of the general population.
He said that the Catholic Church would continue to criticize
the government as appropriate and work to alleviate poverty.

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Ambassador and Attorney General Discuss Priorities
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6. (U) On 2/28, the Ambassador met Attorney General Candia
stressing the importance the U.S. placed on adoption of the
anti-money laundering law and reform of the procedural code.
Candia conveyed his support on both initiatives, noting that
he had discussed with President Duarte support for the AML
law. Candia described his desire to strengthen the Public
Ministry as an institution weeding out bad prosecutors,
training the good ones, and obtaining greater resources
particularly for prosecutors historically neglected in the
country's interior. The Ambassador applauded his initiative
but reminded him that that it was just as critical he address
the problem of impunity particular as relates to cases
covered by the Economic Crimes Unit including the cases of
Barrakat, Hijazi, and Panza (mid-level customs official
implicated in offering a bribe). This unit has received
resources in the past and will receive significantly more
with implementation of Millennium Challenge Account Threshold
Plan; it was critical he support the unit and press for
closure on key cases.

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Prosecutor Accused of Taking Bribes
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7. (U) On 3/2 prosecutor Arnaldo Giuzzio charged fellow
prosecutor Miguel Angel Jara Servian with several counts of
accepting bribes. Jara Servian was filmed during an operation
by the Anti-Corruption Unit (UFA) receiving a bribe of 2
million guaranies (roughly 333 USD) to drop charges against a
suspect. Jara Servian's assistant, Vivian Valenzuela, is also
under investigation, but has not been charged. Jara Servian
was the prosecutor for the Itapua Department, located
approximately 231 miles Southeast of Asuncion, where
corruption problems are especially pronounced.

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Ambassador and Mayor Seeking U.S. Scholarships
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8. (U) On 3/2, the Ambassador called on Asuncion Mayor
Enrique Riera. Among other things, they discussed joining
efforts to secure scholarships and financial assistance for
underprivileged , English-speaking Paraguayan students to
attend universities in Florida and elsewhere. The Ambassador
advised that he is seeking the cooperation of some 45
universities in this regard. Riera participated in a student
exchange program in the U.S. in 1976, and has a solid network
of connections in Miami. Miami and Asuncion are sister cities.
CASON