PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 29 -

C O N F I D E N T I A L ASUNCION 000804

SIPDIS

SIPDIS

STATE FOR EB/IFD/OIA AND INL - ABBY SMITH
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: DECL: 08/06/2016
TAGS: PGOV PREL KCRM SNAR MASS MCA PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 29 -
AUGUST 4 2006

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


1. (U) SUMMARY:
-- USAID Project Yields Positive Results
-- CAPSTONE Visits Paraguay
-- Dirty Paraguayan Deputy on the Defensive
-- Police, Drugs Involved in Kidnapping


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USAID Project Yields Positive results
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2. (U) The Controller General's Office filed a claim before
the Jury for the Prosecution of Magistrates against labor law
judge Blanca Benitez Rivas. Judge Benitez Rivas allegedly
committed prevarication and breach of her official duties as
a judge by seizing GOP's public assets, which is prohibited
by law in a legal case in which GOP was not even the
defendant. Investigation and evidence collection for this
case was conducted by the Investigative Unit (USAID supported
project) of the Controller General's Office. In an ABC
article on July 30, local media praised the quality of the
unit's investigation. With solid evidence it will be more
difficult to acquit corrupt officials (a common practice in
Paraguay),advancing mission efforts to combat impunity and
corruption, including influence peddling.

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CAPSTONE Visits Paraguay
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3. (SBU) On 8/2, 19 members of CAPSTONE arrived in Asuncion
from Brasilia, Brazil, for two-days of meetings as part of
their regional orientation. CAPSTONE is a mandatory 6-week
course for officers that have attained the rank of
General/Flag Officer (one-star). As part of the course, an
international trip is arranged to orient the officers to the
region of their assignment. During their visit, the CAPSTONE
members met with Gen Jose Key Kanazawa, Commander of the
Armed Forces; Cesar Aguilera, Vice-Minister of Defense;
Victor Hugo Pena Bareiro, Secretary General of the Ministry
of Foreign Relations; and Col. Victor Picagua, Director of
the Institute of Strategic Studies. On 8/4, the CAPSTONE
members departed for Buenos Aires. We received a press query
from a Brazilian press outlet about the DC-10 carrying the
CAPSTONE participants that landed in Ciudad del Este.
Amembassy Brazilia fielded the query. Paraguayan press
coverage was minimal and innocuous which is welcome in the
run up to our efforts to renew our agreement for military
exercises with Paraguay in 2007.

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Dirty Paraguayan Deputy on the Defensive
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4. (C) Colorado Party Deputy Magdeleno Silva, long alleged
to be linked to drug traffickers in the Departments of
Concepcion and Pedro Juan Caballero, finds himself on the
defensive over charges that he sought to lift a SENAD
(Anti-Drug Secretariat) roadblock targeting drug traffickers
in Concepcion on July 23. On 7/31, SENAD Director Hugo
Ibarra told PolCouns that he had received a call from
President Duarte on 7/23 at Silva's request about the
roadblock. Apparently, Silva had told the President that the
roadblock was obstructing Paraguayans from voting at the
polls in Colorado primary elections for municipal offices.
According to Ibarra, the President supported Ibarra once he
explained the roadblock was in connection to an ongoing
operation. As details of Silva's intervention has become
public, he has come up for criticism by Vice-President
Castiglioni and a senior Colorado Senator. Separately,
opposition party deputies from the Beloved Fatherland Party
have called for his suspension from Congressional proceedings
for 60 days should there emerge concrete evidence of his
obstruction of a drug operation. On the defensive, Silva has
announced that he has hired 10 lawyers to sue people who are

making false charges against him.

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Police, Drugs Involved in Kidnapping
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5. (U) On 8/1, the police arrested Benicio Gonzalez, a
police official, along with his father and his brother, for
involvement in the kidnapping of Edson Armoa Doldan on 7/30
in Ciudad del Este. Doldan had been released on 7/31
released when his family paid a $100,000 ransom. When police
arrested Gonzalez for the kidnapping they found and seized 39
kilos of cocaine in his residence. According to SENAD
Director Hugo Ibarra, Doldan's father (Jorge Doldan) has a
history of involvement in drug trafficking. It is believed
Gonzalez, his father and brother found and took the cocaine
when they kidnapped Doldan on his father's farm.
CASON