PARAGUAY POLITICAL AND ECONOMIC UPDATE MAY 5-11,

C O N F I D E N T I A L ASUNCION 000389

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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: 05/11/2027
TAGS: PGOV PHUM PREL PA AR VE
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE MAY 5-11,
2007

REF: ASUNCION 0177

Classified By: A/DCM James P. Merz; REASONS 1.4 (b),(d)


1. (U) SUMMARY:

-- CDA Meets the Israeli Ambassador
-- TSJE Credibility Low; Infighting Continues
-- New Customs Unit Seizes Contraband
-- Indigenous Get Help from Itaipu


CDA MEETS THE ISRAELI AMBASSADOR


2. (C) The CDA received Israeli Ambassador to Paraguay
(resident in Argentina) Rafael Eldad and Israeli Honorary
Consul in Paraguay Max Haber May 11. Ambassador Eldad was
very interested in the campaign of former Monsignor Fernando
Lugo and wanted to know the USG view of Lugo's prospects of
becoming the president. Eldad was also curious about the USG
views on the up-coming elections, particularly within the
Colorado Party. The CDA addressed those issues as well as
the Tri-Border Area, terrorism, transnational crime, and the
Muslim community activities. Eldad also discussed his
concerns about the relationship between Argentine President
Kirchner and Venezuela's President Chavez. He said with
Chavez embracing Iranian President Ahmadinejad, the Jewish
comunity was concerned about the position of Kirchner. He
conceded however that privately Kirchner has indicated to him
that Argentina does not share Chavez' view of Iran but has
befriended Chavez for providing financial assistance when the
country needed it. Argentine and Brazilian pursuit of Middle
East markets for exports, he said, also make it difficult for
those governments to speak out publicly against Iran's
growing interests in the region.

TSJE CREDIBILITY LOW; INFIGHTING CONTINUES

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3. (U) The run-up to the 2008 elections promises to be very
difficult for the country's Electoral Tribunal (TSJE). Two
ministers remain under pressure (as a direct result of the
firing of the TSJE's IT Director last December) and the
public image of the organization is in a free-fall. In a
recent poll released May 10, 46 percent of the population
have no confidence in the country's Electoral Tribunal (TSJE)
and do not believe the up-coming elections cycle will be free
and fair. Only 29 percent believe the TSJE will do well,
while another 25 percent are unsure. Liliana Benitez, the
TSJE Director of Public Relations, told PolOff May 1 that

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moral is very low and indicated several professional staffers
are considering leaving, including herself. (NOTE: TSJE
Minister Alberto Ramirez Zambonini told PolOff in February
that the other two ministers politicized the decisions of the
TSJE and that he would do everything in his power to either

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get rid of them or he would discredit the organization and
leave himself. The Congress has tried to impeach Ministers
Dendia and Morales but did not have the votes. They were
asked to resign April 9 but both declined. (reftel) END
NOTE.)

NEW CUSTOMS UNIT SEIZES CONTRABAND


4. (U) Representatives of Customs, newly vetted
investigations unit stopped a flat bed truck May 4 carrying
one ton of contraband sugar/flour on the outskirsts of
Asuncion, near the border with Argentina. The driver of the
truck decided to take flight, slamming the two MCA-funded
customs vehicles parked in front of and behind the truck.
Police officials shot out the truck,s tires. The driver was
taken into custody and his truck was delivered to the
customs, warehouse. In short order, those folks who were to
have been involved in distributing this contraband
merchandise attacked the warehouse, tossing Molotov cocktails
and demanding the release of the merchandise. Four
individuals were reportedly arrested. (NOTE: The Ambassador
delivered the 23 MCA-funded vehicles to Customs in April at a



ceremony attended by President Duarte. END NOTE.) A/DCM
contacted Customs and the Attorney General to extend U.S.
congratulations, particularly to the investigative unit. The
unit showed great courage and skill in investigating this
case, even in the face of fierce resistance.

INDIGENOUS TO GET HELP FROM ITAIPU


5. (U) The Paraguayan Indigenous Institute (INDI) announced
April 26 that 30 indigenous groups, totaling 1,102 families,
in the Canindeyu Department will receive medical and
agricultural assistance. The indigenous community requested
this assistance in August 2006. The funding for this project
will come from the Itaipu Binational Dam, which intends to
begin distribution of the agricultural assistance next week.
Merardo R. Rodriguez, an Economist at INDI, told PolOff May
10 that the program has a value of USD 655,393 (3,276,964,211
Guaranis) and will help a large number of people. Some
members of the Ava Guarani group mentioned that they are
pleased with receiving this benefit and believe it is crucial
for them to get this assistance for the survival of their
families. (NOTE: Victor Bernal, a possible VP candidate under
Education Minister Blanca Ovelar, is the Paraguayan General
Director of the Itaipu Binational Dam. This project
represents one of the largest social program dispursements to
indigenous communities. END NOTE.)
FITZPATRICK