PARAGUAY: A/S SHANNON STRESSES POSITIVE U.S.

UNCLAS ASUNCION 000379

SIPDIS

SIPDIS
SENSITIVE

C O R R E C T E D C O P Y (PARA 4)

NSC FOR JOSE CARDENAS; SOUTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: PREL PGOV KDEM PTER ECON PA
SUBJECT: PARAGUAY: A/S SHANNON STRESSES POSITIVE U.S.
AGENDA, SCORES POINTS IN NGO COMMUNITY

REF: A. ASUNCION 0355


B. ASUNCION 0356


1. (U) SUMMARY: A/S Shannon expressed during his April 26-28
visit the U.S. commitment to strengthening our relationship
with Paraguay and the region, based on a deeper appreciation
for the economic and social challenges facing the region.
Members of U.S.-funded investigative units expressed their
frustration in the fight against corruption and impunity,
noting that without USG support their organizations would not
exist. Leaders of eight NGOs also expressed pessimism
regarding the state of Paraguay in eradicating corruption and
impunity, pointing to their battles with the Duarte
Administration. The A/S swore-in 29 Peace Corps volunteers
and celebrated their 40th anniversary in Paraguay. Shannon
received broad and favorable press coverage throughout his
visit, wowing the bureaucrats, the business sector and the
media, alike. END SUMMARY.

Business Sector Roundtable
--------------


2. (U) The Ambassador hosted a roundtable discussion for A/S
Shannon with a group of Paraguay,s major business
associations representing soy and beef producers, biofuels,
importers, the services and maquila sectors, the
Paraguay-American Chamber of Commerce and the Department of
Commerce-supported Good Governance ethics program. The
business leaders faulted Paraguay,s political class for a
lack of leadership and the lack of any concrete, long-term
plans for improving Paraguay,s economy. They were
universally pessimistic about Mercosur, complaining that
while commodity products pass freely to neighbors Brazil and
Argentina, valued-added products meet bureaucratic and other
obstacles. They generally acknowledged, though, that being
poor, small and landlocked, Paraguay had little choice but to
keep trying to make the best of it. Judicial insecurity and
rising crime were other commonly cited impediments to
increased investment, whether domestic or foreign. The
business leaders hoped that the United States would continue
efforts to strengthen Paraguay,s institutions as with the
Millennium Challenge Threshold Program, and also expressed
hope that the U.S. would be able to improve market access for
Paraguayan products.

Tri-Border Investigators
--------------


3. (SBU) A/S Shannon met with the heads of four USG-supported
investigative units and a prosecutor to discuss tri-border
law enforcement issues. Three of the vetted units (Tax,
Customs and a Ministry of Finance anti-corruption unit) are
receiving assistance from Treasury,s Office of Technical
Assistance under the MCC Threshold Program. The fourth unit,
Special Technical Unit (UTE),is an IPR investigative unit
assisted with INL Bureau funds. Paraguayan officials
conveyed appreciation for the USG assistance, which they said
is vital to insulate them from political pressures. One
commented that he was sure they,d all have been sent home
and their units disbanded by now if not for overt Embassy
support.


4. (SBU) The investigators were generally pessimistic on the
state of the GOP in terms of corruption, maintaining that the
criminals are given the space to operate by the corrupt
government officials or politicians. Several had examples of
times when political pressure was brought to bear, either
directly to cease investigating, or indirectly when judges
scuttled good cases. They characterized the major crime
elements involved in smuggling and the trade in counterfeit
goods as mainly foreigners, principally Taiwanese and Arabs.
Paraguayans are nearly always involved, but typically as
front people who sign documents, making it difficult to get
at the kingpins. They all complained of lackluster support
from their own government, citing poor salaries and small or
non-existent budgets. Cooperation with other countries in
the region is growing - specifically with the customs and IPR
units. They agreed that the public supports their efforts
and are tired of impunity and the illicit enrichment so
common here.


NGO's Opinions on Paraguayan Progress
--------------


5. (U) Paraguayan NGOs candidly addressed several of their
concerns with A/S Shannon. These NGOs are engaged various
areas such as anti-corruption, rule of law, environment,
local government strengthening, civil society strengthening,
and microfinance. Most of these organizations are supported
by USAID/Paraguay, which implements a large part of its
development portfolio through NGO partners.


6. (U) The participating organizations expressed their view
that civil society is still weak in Paraguay. According to
the attendees, only approximately 200 of a few thousand
organizations, are financially stable. They maintained that
the Duarte administration has been hostile toward NGOs, using
surprise audits to go after certain NGOs; supporting
legislation that would tax the work of NGOs; and faulting
NGOs for not doing enough to address social issues caused by
poverty including street children notwithstanding the
millions of dollars they receive each year. These attacks
have damaged the public image of NGOs.


7. (U) Corruption and impunity are considered the most
difficult barriers to Paraguay,s development and factors in
the growing resentment of the population toward the
government. This resentment could build until it reaches a
breaking point or the Paraguayan population could just remain
apathetic. The reaction of the population is not
predictable. They believe that the public's perception is
that institutions have grown weaker and less independent
during the Duarte administration. The Judiciary and the
Electoral Tribunal were mentioned as having deteriorated.

Peace Corps Swearing-in
--------------


8. (U) The Assistant Secretary administered the "oath of
office" April 27 to the most recent contingent of 29 Peace
Corps volunteers. The volunteers arrived in country in
February 2007, and had just finished 11 weeks of intensive
cross-cultural orientation, as well as Guarani and Spanish
language training. Peace Corps Paraguay is celebrating its
40th anniversary this year, with media events throughout the
year. There are more than 150 volunteers in Paraguay, making
it the third-largest PC program in the world. Before a heavy
media presence from print, television and radio, the
Assistant Secretary spoke of the importance of the Guarani
language, particularly, as a means of building bridges of
cross-cultural understanding. The A/S presence was a big hit
with the new volunteers, and substantive media coverage
resulted.

Press Delighted by A/S Presence
--------------


9. (U) A/S Shannon addressed news media representatives
throughout his visit. The collegial encounters covered U.S.
interest in using the Doha Round of trade negotiations to
encourage economic development in impoverished countries,
precursor steps such as a TIFA with Paraguay that deepen the
bilateral trade relationship, and U.S. views regarding the
Banco Sur concept from Venezuela. A/S Shannon also addressed
the potential for biofuel production in Paraguay and the
region, 3-plus-1 cooperation in combating narcotics and money
laundering in the Tri-Border Area and U.S. support for the
democratic process in Paraguay.


10. (U) A Spanish-language transcript of both the Peace Corps
press conference transcript and the FM press encounter was
immediately posted on the Embassy website at:
http://spanish.paraguay.usembassy.gov/.

Wining and Dining Media
--------------


11. (U) The Ambassador hosted a dinner in honor of A/S
Shannon April 27 with nine influential, senior level
columnists, editors and broadcast media news personalities.
The A/S described President Bush,s engagement with the
region by speaking to his recent trips and the thinking

behind each place visited. A/S Shannon also discussed the
MCC Threshold Program in Paraguay, the challenges posed by
consolidating democracies, and U.S. views of populism in the
region. The exchange with Paraguayan media Brahmins deepened
understanding of USG policies as well as instilled in those
in attendance that the U.S. is committed to stronger
relations.

English Students Discuss Issues with A/S
--------------

12 (U) A/S Shannon and the Ambassador visited the San Lorenzo
branch of the Centro Cultural Paraguayo-Americano (CCPA),a
leading English teaching institution and primary Embassy
partner in the cultural community, April 28. A tour of the
CCPA,s brand new building and recently inaugurated American
Corner were followed by a meeting with the Board of
Directors. The discussion centered around the strategic
regional importance of teaching English and the challenges
facing Paraguay in the recruitment of sufficient teachers to
meet the high demand for the English language. The A/S then
visited 28 English micro-scholarship students and engaged
them in a lively exchange completely in English on a host of
topics, including the historic importance of the Guarani
language. The A/S presented cultural books on the U.S. to
each of the four Micro-scholarship program teachers.


13. (SBU) COMMENT: The A/S visit was a success and
highlighted the USG commitment to work jointly with Paraguay
on an array of issues. His command of the pertinent issues
resonated with Paraguayan meeting attendees. Shannon
presented a positive agenda to the public in stark contrast
to the image of the U.S. that Venezuela's Chavez would like
to project. Post expects the Shannon visit to continue to
get positive press in the coming days and weeks as much of
what the A/S discussed resonated with the media leaders with
whom he met and the broader general public. END COMMENT.
CASON