PARAGUAY POLITICAL AND ECONOMIC UPDATE FEBRUARY 24

C O N F I D E N T I A L ASUNCION 000159

SIPDIS

SIPDIS

STATE FOR WHA/BSC, INL/LP (JIM HIDES)
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: DECL: 03/02/2027
TAGS: PGOV PHUM PREL PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE FEBRUARY 24
- MARCH 2, 2007

REF: A. ASUNCION 0138


B. ASUNCION 1221 AND PRECEDING

Classified By: Pol Chief James P. Merz; Reasons 1.4(b),(d)


1. (U) SUMMARY:

-- Soto Moves On Military Transformation
-- Animal Health Service Goes To Paris
-- Ycua Bolanos Fire Case to be Retried
-- MCA Legislative Component Suspended

SOTO MOVES ON MILITARY TRANSFORMATION


2. (C) General Bernardino Soto Estigarribia, the Commander of
the Armed Forces, told DAO he formed a commission of top
military aides to propose changes to Law 216/93, which
establishes the general organization of the military forces.
The commission held its first meeting February 21 and
continues to meet daily. Soto said the proposed changes
should be ready for submission to the Paraguayan Congress in
March. Currently, he is concerned troops are ill deployed
with an unclear sense of mission. Through the process of
military reorganization, he seeks to better align his
military forces to their mission objective. At this time,
Paraguay does not have a National Security Strategy (NSS),
which once developed would surely effect military structure.
Soto said the reorganization of the military can not wait for
the political decisions on a NSS. (COMMENT: VP Advisor Juan
Facetti told PolOff February 22 that the President has
authorized a committee of 5 persons to meet in April 2007 to
begin the process of composing a NSS. It is not likely that
the NSS committee will move forward on a timely basis as the
highly politicized presidential election season has already
begun and at least two of the committee members are potential
candidates. END COMMENT).

ANIMAL HEALTH SERVICE GOES TO PARIS


3. (U) Hugo Corrales, Director of SENACSA, Paraguay,s animal
health regulatory body, met in Paris with the Director
General of the World Animal Health Organization (OIE).
Corrales is fighting what he sees as attempts by Brazil and
Argentina to blame Paraguay for Foot-and-Mouth Disease (FMD)
outbreaks among cattle in areas around Paraguay in recent
years (ref. A). Paraguay is currently one of a few countries
considered FMD-free with vaccination by the OIE. Local press
reports quoted Corrales as saying that he had won the support
of the OIE Director General, although the DG,s remarks were
less specific. Paraguay is engaged with USDA agencies in an
effort to gain access for Paraguayan beef to the US market.

YCUA BOLANOS FIRE CASE TO BE RETRIED


4. (U) A new three-judge panel was selected February 28 to
review the case against Ycua Bolanos Supermarket owners, Juan
Pio Paiva and Victor Daniel Paiva, and security guard Daniel
Areco for the August 1, 2004 fire that killed more than 350
persons. Late last year, the defendants were about to be
convicted of manslaughter and sentenced to five year prison
terms in connection to claims they ordered guards to lock the
supermarket gates to prevent looting. However, the trial's
closing proceedings were suspended when family members and
friends of victims erupted in outrage as the final judge
started reading his decision, signaling a conviction for
manslaughter vice homicide (which would have carried a
sentence of at least 25 years but required a determination
that the "murders" were premediated). Notwithstanding severe
public pressure to "correct" the sentence, it is not apparent
under what legal authority the prior decision was thrown out
and a new case opened. Attorney General Candia applauded the
decision telling Charge, this week that the case's "special"
circumstances called for legal authorities to assume
"special" measures to allow for the retrial. Pressed, Candia
conceded that "yes, the mob won. But we won, too." COMMENT:
This case speaks volumes about the "rule of law" in Paraguay.


While the fire's consequences were tragic, we aware of no
evidence the supermarket owners intended to kill those in
their facility when the fire broke out. Clearly, this
decision responds to public pressure but in the process does
little to promote respect for rule of law. END COMMENT.


MCA LEGISLATIVE COMPONENT SUSPENDED


5. (U) USAID suspended work on Millennium Challenge Account
Component 5, Legislative Oversight of the Budget, because it
was deemed seriously "off-track." Absent a Herculean
turnaround in congressional interest and commitment, this
component is in danger of being taken off the rails
permanently. Although formal approval exists by both Houses,
there has been no real commitment shown by the leaders of
either House. The leaders of both houses were notified in
December and January about USAID concerns regarding delays
and requested to accomplish specific tasks by February 9 in
order for the component to continue. Few of those tasks were
completed and USAID suspended work for up to 30 days
beginning February 28.
CASON