PARAGUAY POLITICAL AND ECONOMIC UPDATE, MAY 13-19,

UNCLAS ASUNCION 000536

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
NAIROBI FOR MICHAEL FITZPATRICK

E.O. 12958: N/A
TAGS: PGOV PREL PINR PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, MAY 13-19,
2006

REF: A. ASUNCION 0479

B. ASUNCION 0507


1. (U) Summary
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-- Duarte Visits Vienna, Brussels, and Paris
-- Defense Commission Supports US Military Exercises
-- Cubas Suspects Seek Refuge in Bolivia

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Duarte Visits Vienna, Brussels, and Paris
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2. (U) Over the last two weeks, President Duarte attended the
Latin America-EU Summit in Vienna followed by bilateral
visits to Brussels and Paris. During the Summit, President
Duarte expressed hope that Mecosur countries would be able to
negotiate bilateral trade agreements, noting that the smaller
Mecosur countries (Paraguay and Uruguay) were at a
disadvantage. In Brussels, Duarte signed a cooperation
agreement under which Belgium would supply technical and
financial assistance to improve Paraguayan ports and to
refurbish downtown Asuncion's streetcar system. On May 17 and
18, Duarte urged French President Jacques Chirac to persuade
the French Paribas Bank to withdraw its claim against
Paraguay from a Geneva court that ordered Paraguay to pay
US$85 million. (Note: This is in reference to the fraud
charges against Gustavo Gramont Berres in 1986 involving
several European Banks. End Note.)

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Defense Commission Supports US Military Exercises
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3. (U) On May 16, members of the lower congressional house
Defense Commission voted down a resolution proposed by the
PBeloved Fatherland Party (PPQ) that called upon the
government to reject a new series of US military exercises in
Paraguay in 2007. In statements to the press, members of the
defense commission noted that Paraguay is receiving benefits
from the exercises that they would like to continue,
especially the medical assistance (MEDRETE) exercises. On
May 3, members of PPQ signed a resolution calling for
suspension of Paraguay's participation in the US military
exercises complaining about the protections the GOP had
extended to US participants which they maintain contravened
Paraguay's obligations under the Rome Treaty. PPQ's
resolution remains under review by the Commissions of
Constitutional Affairs and International Relations in the
House of Deputies.

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Cubas Suspects Seek Refuge in Bolivia
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4. (U) On 5/12, Interpol announced that Paraguayan nationals
Angel Acosta and Blas Franco Aquino, who are under
investigation for their involvement in the kidnapping and
murder of Cecilia Cubas, were located in La Paz, Bolivia.
Subsequently, the Bolivian government extended Acosta and
Franco temporary refugee status pending a final decision.
Juan Emilio Oviedo, Director of International Affairs in the
Attorney General's Office, told PolCouns that the GOP has
requested the Bolivian Government to expel Acosta and Franco
as presently there is no extradition treaty between the GOP
and the GOB. Oviedo expressed pessimism regarding the
prospects the GOB would return Acosta and Franco to
Paragauay. (NOTE: Mirtha Gusinsky, mother of Cecilia Cubas,
planned to visit Bolivia to press the GOB authorities to
return the two men to Paraguay. Both men have pending
warrants for their arrest. In the last two weeks, six other
members of the group were detained and arrested in Argentina
after seeking refugee status. End Note.) (ref. A and B)
CASON