PARAGUAY POLITICAL AND ECONOMIC UPDATE, JUNE 3 -

UNCLAS ASUNCION 000605

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 PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JUNE 3 -
JUNE 9, 2006

REF: A. ASUNCION 0507

B. ASUNCION 0589


1. (U) SUMMARY:
-- Ambassador Signs Environmental Agreement
-- Duarte Plans Meeting with Ministers on MCA
-- Coordinating Anti-TIP Efforts
-- Paraguay's Ambassador to Argentina Removed


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Ambassador Signs Environmental Agreement
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2. (U) On 6/7, the Ambassador signed an agreement that names
Paraguay as a recipient of USD 7.4 million under the Tropical
Forest Conservation Act of 1998. The agreement is a bilateral
initiative based on the 1991 Enterprise for Americas
Initiative which allowed countries to convert their foreign
debts into funds directed towards programs to support child
survival and environmental conservation. The signing ceremony
for the Tropical Forest Agreement and the Debt Reduction
Agreement took place at the Palace of the Government, and
President Duarte Frutos signed the agreement as a witness of
honor. Acknowledgment was also given to Vice President
Castiglioni, Ministry of Finance, Ernst Bergen, Ministry of
Foreign Relations, Leila Rachid, Ministry of Environment,
Alfredo Molinas, as well as other Ministries, Congressmen,
and Senators, national and local authorities, other
ambassadors, and representatives from NGOs, civil society,
the private sector, and cooperative agencies. The agreement
marks a commitment between the governments of both Paraguay
and the United States to work together to ensure conservation
of tropical forests in the Atlantic Forest of the Alto
Parana. The agreement entails a partnership between public
and private sectors, led by civil society and local
communities, to identify specific goals for conservation and
then mobilize the community to institute creative solutions.
Congress must ratify the act by 9/29, which USAID
representatives in Asuncion believe to be likely.

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Duarte Plans Meeting with Ministers on MCA
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3. (U) Minister Walde and Victor Sosa briefed President
Duarte on the Millennium Challenge Account Threshold Country
Program for Paraguay approximately two weeks ago. Victor
Sosa, Technical Director of the program, reported that the
President seemed very excited about the matter. Duarte
indicated that he encourages all seventeen ministries
involved to honor their commitments under the program. Victor
Sosa also reported that in order to accomplish this goal the
President plans to meet with all seventeen ministries this
month. The MCA is a USD 35 million program that will span 10
activities focused on combating impunity and informality. The
program will be implemented in two years and Paraguay must
satisfy a range of performance indicators in order to be
considered eligible for a MCA compact. (ref. A)

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Coordinating Anti-TIP Efforts
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4. (U) Post has made a concerted effort to coordinate its
anti-TIP work with other key players from the international
community. In recent weeks, PolOff met with Bernardo Puente,
International Labor Organization Country Representative;
Vivian Argueta, Inter-American Development Bank
Representative; and Dr. Luis Bogado Poisson, Director of the
International Organization of Migration, to set the
groundwork for a larger meeting among all donor NGOs and
Embassies that assist the GOP on anti-TIP efforts. The
planned purpose of this future meeting is to better
coordinate and concentrate funding to support the critical
need areas in the fight against TIP. PolOff through numerous
conversations with GOP officials identified some of those

critical needs in a recent request for additional funding.
(ref. B)

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Paraguay's Ambassador to Argentina Removed
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5. (U) On June 3, FM Rachid removed Orlando Fiorotto as
Paraguay's Ambassador to Argentina. In the course of
hearings held in Argentina the prior week by Paraguay's Truth
and Justice Commission which is investigating abuses
committed during General Stroessner's dictatorial regime,
Fiorotto was accused of being an informant during
Stroessner's regime. Fiorotto denied the charges and
insisted that Rachid and several Colorado Party members had
targeted him for seeking to fire Paraguay's well-connected
minister counselor in its Embassy in Argentina. Upon his
return to Paraguay, Fiorotto announced plans to run for mayor
of Asuncion in elections scheduled for November.
CASON