PARAGUAY: AMBASSADOR AND FM RACHID DISCUSS

C O N F I D E N T I A L ASUNCION 000266

SIPDIS

SIPDIS

NAIROBI FOR MICHAEL FITZPATRICK
SOUTHCOM FOR POLAD BARBARA MOORE
NSC FOR SUE CRONIN

E.O. 12958: DECL: 03/09/2016
TAGS: PGOV PREL PINR KCRM PA
SUBJECT: PARAGUAY: AMBASSADOR AND FM RACHID DISCUSS
ANTI-MONEY LAUNDERING LAW, CABRAL, MILITARY EXERCISES, AND
ARTICLE 98

REF: STATE 16171

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

Summary
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1. (U) Summary. On 3/7, the Ambassador stressed to FM
Rachid the importance the U.S. places on rapid adoption of
anti-money laundering legislation. He reminded her that
naming corrupt police officer Aristides Cabral Paraguay's
police chief would cause serious damage to our relations,
particularly in terms of law enforcement cooperation. Rachid
opined that developing an agreement on military exercises in
2007 was realistic and conveyed her willingness to "continue
talking" about an Article 98 arrangement. She requested a
meeting with the Secretary to discuss regional concerns.
Both the Ambassador and FM agreed to look at scheduling a
signing ceremony for an MOU on a Seismic Monitoring Station
for late March, early April. End Summary.

Adoption of AML Law is Litmus Test for GOP
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2. (U) Ambassador stressed the need to for the Congress to
move quickly in adopting AML legislation, describing it as a
"litmus test" for Paraguay's commitment to fighting
corruption. Paraguay had done the right thing in ratifying
anti-terror conventions but the legislation was necessary to
fulfill international commitments. Some Senators and other
sectors, including banks, may have objections to the law.
They need to come together to work out compromise language
with the law's drafters, ensuring the essential principles
are retained. Rachid appreciated the need for Paraguay to
adopt this law and said she would talk to her brother, Bader
Rachid, who is Senate President of the Legislation Commission
which is reviewing the law and who has flagged concerns about
the law in the past.

Drawing the Line on Cabral
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3. (C) Cabral has been back in the news with the recent
release of the INSCR which notes our concern about his
appointment to a key position in the Department of Presidente
Hayes. FM Rachid and Interior Minister Benitez have been
quoted in the press alleging the U.S. had not presented
proof. In speaking with the Ambassador in private on this
issue, Rachid maintained the President did not want
controversy over this issue to damage the strong rapport he
had developed with the Ambassador. The Ambassador shared
that view but reminded Rachid that naming Cabral Police Chief
was a non-starter for the U.S. and would severely damage
relations, particularly on law enforcement issues. We could
share with her, again, the information we have on Cabral but
then we would have to tell that to the press if they raised
the issue again. Rachid said that she did not need to see
the information but welcomed any kind of hard proof in the
form of taped conversations implicating Cabral. (Comment: We
consider the request for proof of Cabral's sins less than
sincere. Those within the GOP who have had dealings with
Cabral know full well he is crook; the problem is that he is
their crook. It is unlikely they will find any tapes we
might provide them "sufficient" proof of Cabral's veniality.
End Comment.

Military Exercises
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4. (SBU) Noting the controversy over the last agreement on
U.S.-Paraguay military exercises expiring in December 2006,
the Ambassador asked for Rachid's views regarding a new
agreement to cover exercises starting in 2007. Rachid
thought concern about a U.S. "military" base were behind us
(Note: This was prior to the NYT MLE story. End note). She
was encouraged by recent positive press about a U.S. medical
readiness exercise in the Department of San Pedro providing
impoverished individuals with life transforming medical
attention. She recommended we look at drawing up the terms
for an agreement on a list of exercises for 2007 but that it
would be best we not take this up with the Congress until the
of term of Sen. Filizzola, a strong U.S. opponent, expires in
June 2006.

Article 98
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5. (SBU) The Ambassador asked Rachid if she had taken a
decision on how to move ahead with agreed text our respective
lawyers had worked out on an exchange of notes for an
arrangement on Article 98. Rachid stressed her personal
engagement on this issue and described her desire to find
mutually acceptable language that would not constitute an
agreement that would require Congressional approval and would
still provide our citizens with the protections we sought.
She signaled the text worked out by our lawyers was still not
agreeable and suggested our lawyers huddle again. She said
that our responding to Paraguay's letter of October 2003
would be helpful but as an alternative suggested we look at
trying to find language in Article 10 of the Rome Treaty in
concert with our extradition treaty to provide the
protections we need. She explained that Paraguay, given that
it has ratified the Rome Treaty, found itself in an awkward
position seeking to accommodate U.S. needs. However, she
maintained that she was committed to "continuing discussions"
on this issue. Comment: Post believes Paraguay is not/not
serious about reaching an agreement on this issue. Rachid is
incapable of saying this, but her suggestion we go back to
the drawing board in terms of finding language we thought we
had already agreed to and her commitment to "continuing to
talk" about this issue -- vice "forging a solution" send a
very clear message. End Comment.

Request for Meeting with the Secretary
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6. (SBU) Rachid stressed her desire to meet with the
Secretary, if not in Chile for Bachelet's inauguration then

SIPDIS
at some unspecified time in the future. She was concerned
about the false choice facing the region. Paraguay had
problems with Mercosur but did not support Uruguay's tact in
negotiating agreements independently with the U.S. On a
related level, Paraguay shared our concerns about the
influence of Venezuela in the region and the direction
Bolivia had taken with recent elections. She thought the
U.S. could offer a pragmatic middle course and wanted to
discuss with the Secretary how the U.S. might engage more
effectively in addressing shared regional concerns. Comment:
In view of concerns over Cabral and the delay in adopting
the AML law, post would recommend against the Secretary
meeting with FM Rachid at this juncture. End Comment.

MOU on Seismic Monitoring Station
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7. (U) In 1989, the U.S. and Paraguay signed an agreement
to establish a seismic monitoring station in the District of
Caapuc in the Department of Paraguari. In 1999, the two
parties signed an MOU that replaced the original agreement
and assigned responsibilities to the two parties for
effective operation of this station. Paraguay and the U.S.
have agreed to a text for a new MOU that further refines
responsibilities for operation of this station and would
replace the 1999 MOU. FM Rachid and the Ambassador agreed to
try to sign this MOU later in March or early April.

CASON