PARAGUAY: AN OUNCE OF DRUG DISRUPTION WORTH A KILO

C O N F I D E N T I A L ASUNCION 000394 SIPDIS SIPDIS WHA FOR A/S SHANNON; INL FOR A/S PATTERSON; NSC FOR JOSE CARDENAS; SOUTHCOM FOR POLAD E.O. 12958: DECL: 04/26/2027 TAGS: SNAR PREL PGOV KCRM PA SUBJECT: PARAGUAY: AN OUNCE OF DRUG DISRUPTION WORTH A KILO OF CURE Classified By: Charge Michael J. Fitzpatrick; Reasons 1.4(b),(d) ¶1. (C) SUMMARY: Paraguay remains a major transshipment corridor for (mostly Bolivian) cocaine, Colombian FARC arms-for-drugs deals and regional money-laundering. But the combination here now of strong leadership, new infrastructure, strengthened legislation, beefed-up human resources and the best working relationship DEA has anywhere in the Southern Cone or Brazil all provide a window of opportunity to put the traffickers here on the defensive while exposing both their regional business connections and local political patrons. A lack of operational funds, however, prevents Paraguay's Anti-Drug Secretariat (SENAD) from effectively using either its brand-new Forward Operating Location on the Brazilian border or its newly expanded agent force. SENAD Director Ibarra urged A/S Shannon April 28 for targeted U.S. assistance. Without an influx of new funds, the USG will have trouble maintaining our present programs here, not to mention avoiding sending the message to all that SENAD is just for show. Department should be aware that FM Ruben Ramirez will almost assuredly raise this issue in the meeting he seeks with the Secretary in June. Post requests Department consider providing total INL funding of $800,000 in FY 2007 to take full advantage of the opportunity presented by Paraguay's intentions and recently expanded capabilities -- all trained, equipped and ready go. END SUMMARY. Paraguay's Quiet Success Story ¶2. (C) Anti-Drug Secretariat (SENAD) Director Hugo Ibarra expressed appreciation to A/S Shannon in Asuncion April 28 for the USG assistance SENAD receives, both resources (including training, equipment, and bonuses for special agents) and coordination and guidance on operational activities. -- A regular schedule of U.S. administered polygraphs of the agents in his semi-vetted unit helps ensure the integrity of those agents involved in the unit's most sensitive operations. -- Paraguay's first DEA-funded Sensitive Investigative Unit (SIU) will be fully operational in August 2007, creating a natural opportunity to step up the tempo of activities should we be able to provide additional critical funding needed. -- A U.S.-funded, prosecutor-supervised land-line intercept program provides key leads for investigations leading to arrests. -- Relying on the U.S. Military Information Support Team (MIST)-funded program, SENAD started posting most-wanted photos around the country putting major traffickers on alert and on the defensive. -- With U.S. backing, Ibarra won Congressional funding for 50 new agents last December, practically doubling the number of available field agents. Those agents have now been selected, vetted, trained and outfitted. -- The Ambassador attended the April 12 inauguration of SENAD's U.S.-funded $500,000 facility (equipped with a helipad and hangar) in Pedro Juan Caballero, located on Paraguay's northern border with Brazil in a region notorious for aerial cocaine transshipments. ¶3. (U) SENAD is widely recognized as the single most-effective law enforcement agency in Paraguay. Ibarra directly attributed the concrete success his agency has had in taking down major traffickers and making significant seizures of cocaine and weapons to the cooperation he enjoys with the U.S. The following list is only illustrative of SENAD's most significant achievements: -- Arrested major Brazilian trafficker Ivan Mendes Mesquita in November 2004, seizing over 250 kilos of cocaine (the largest in Paraguayan history) and putting a major dent in FARC arms trafficking via Paraguay; -- Extradited Mendes Mesquita to the U.S. in June 2005; -- Arrested Cristian Villalta, the son of a well-connected Paraguayan politician, in June 2006 with 195 kilos of cocaine; -- Captured 270 kg. of marijuana in the official vehicle of Colorado (ruling party) Deputy Wildo Legal; -- Seized over 1000 guns and approximately 68,800 rounds of ammunition in a series of three raids over a three month period in late 2006. -- Notwithstanding focus on disrupting trafficking organizations, SENAD seizures of cocaine and eradication of marijuana have risen each year over the last four years. Paraguay's Drug Problem ======================= ¶4. (C) Ibarra advised A/S Shannon that Paraguay faces two separate but connected fronts in its war on drugs. First, Paraguay, by virtue of its location, is a natural air corridor for the trafficking of cocaine, primarily from Bolivia to Brazil, with traffickers exploiting the expansive, flat, underpopulated region in northwestern Paraguay to land and refuel small planes carrying their loads. Paraguay will become a significant land corridor for cocaine coming in from Bolivia later this year -- a concern raised by MFA officials in their meeting with A/S Shannon -- with is completion of the Transchaco Highway scheduled for June. Second, Paraguay is also a major producer of marijuana again primarily trafficked to Brazil. The monies derived from marijuana trafficking, in particular, significantly contribute to corruption in Paraguay's political circles. ¶5. (C) The political temptation to dip into the narcos' profits rises significantly in an election year (presidential elections are April 2008),making Ibarra and SENAD's activities more vulnerable now to political pressures. This point was underscored just this week by cattleman and agroindustrialists from marijuana-growing and cocaine-transhipment areas: they volunteered to the Charge that local politicians no longer hit them up routinely for campaign funds, as traffickers are financing the pols instead. Meanwhile, the local representative of the Inter-American Development Bank (a Colombian) is quietly warning of the coming Colombianization of Paraguay -- increasing areas considered "no go" zones, controlled by wealthy traffickers who buy off or kill those who get in their way ("plomo o plata"); narcos masquerading as elected officials (to obtain immunity from prosecution); and, a national elite all-too-happy to reap the short-term financial windfalls without realizing the damage being done to (already weak) national institutions. ¶6. (C) Ibarra told A/S Shannon that he recognized the U.S. reluctance to fund marijuana eradication efforts insofar as the marijuana is not produced for the U.S. market. He stressed, however, that the same criminals and organizations involved in marijuana trafficking were also involved, albeit on a lesser scale, in cocaine and arms trafficking. Furthermore, marijuana trafficking posed far and away a greater political, criminal and social threat to Paraguay's fragile institutions; it is the political protectors of the marijuana traffickers' that facilitate the operations of the cocaine traffickers, contributing to vulnerabilities that continue to make Paraguay such an attractive platform for money laundering and terrorist financing. Short of Funds to Go the Next Mile ================================== ¶7. (C) SENAD's annual budget is $2,730,000 of which $2,370,000 is from the GOP and $360,000 is from the USG (DEA and INL). With the newly minted facility in Pedro Juan Caballero ("PJC," equipped with a helicopter and four pilots on loan from the Air Force) and his 50 new agents, Ibarra told A/S Shannon that Paraguay was poised to step up its fight against drug traffickers save for one problem: neither the GOP nor the USG presently have the funds to make full use of these assets. Ibarra does not have the funds he needs for helicopter fuel and maintenance ) approximately $10,000 a month. He also lacks the funds he needs to deploy his new agents on marijuana eradication operations, much less to go after the powers behind the business. ¶8. (SBU) Post, meanwhile, has been aggressive about undertaking new projects to strengthen SENAD. In addition to construction of the PJC facility, post is rehabilitating SENAD's other regional facility in Mariscal Estigarribia; providing SENAD a centralized database to facilitate future investigations; establishing canine units across the country; training its new agents; strengthening Paraguayan-Colombian sharing of information and training; and funding operational activities. However, our INL funds are drying up. Whereas in FY 2004 we received approximately $500,000 to support CN activities, in FY 2006, we only received $160,000. As such, we are drawing down on our pipeline cash and expect several of our key accounts -- including operations, equipment, and training -- to be running on fumes, if not empty, by the time we receive our FY 2007 funds we understand currently projected to be approximately $215,000 in project spending. ¶9. (C) Ibarra is hardly the only Paraguayan official concerned about the decline in U.S. counternarcotics assistance over recent years. The MFA raised this issue in its 4/27 meeting with A/S Shannon. Paraguay is proud of its record on certification and its achievements in the fight against drugs and wants to do more. The MFA urged the U.S. to increase assistance to demonstrate its commitment to help Paraguay meet mounting challenges and take full advantage of emerging opportunities. President Duarte similarly stressed the need for greater U.S. counternarcotics assessments in speaking publicly to his meeting with A/S Shannon. We are fairly certain FM Ramirez will raise this issue in the meeting he is seeking with the Secretary for June. ¶10. (SBU) We appreciate the fact funds are finite and that Paraguay already receives a relatively generous portion of the funds in the Latin American Regional account. However, $215,000 spread across six accounts can only go so far. We expect to be able to continue the program of bonuses to the members of Paraguay's semi-vetted units, but we will be hard pressed to provide for the $10,000/month SENAD will need to fund operations out of its new PJC facility. As part of a collaborative effort, both DEA and SOUTHCOM are exploring whether they can free up FY 08 funds for this key objective. However, Ibarra also asks that we look at providing the additional funds SENAD needs to: 1) create/expand SENAD's regional offices in strategic points across the country; 2) fund capital costs and other expenses for undertaking an aggressive schedule of operations to dismantle criminal organizations involved in drug trafficking; and 3) engage more fully the presently underemployed new agents in marijuana eradication and interdiction operations. ¶11. (C) Ibarra applauds USG commitment to combat corruption as reflected by our MCA Threshold Program and efforts to gain adoption of money laundering and terrorist financing legislation (which just passed the House early May; Senate approval hoped for by June). However, Paraguay's efforts to turn the page on corruption will inevitably fall short until it obtains the assistance it needs for a sweeping campaign against marijuana cultivation and trafficking. Fortunately, drug-tainted corruption here still bears a serious mark of stigmatization and shame, one not attached to so many other shades of corruption in Paraguay. We should capitalize on that. ¶12. (SBU) ACTION REQUEST: Post understands funds currently dedicated to eradication activities in other accounts (e.g., Bolivia) may be underutilized due to political considerations. A relatively small increase in funding in Paraguay would go a long way on both an operational level and in terms of sending a strong political signal of support for Paraguay's CN efforts. We request the Department consider earmarking a total of $800,000 for CN activities in Paraguay in FY 07: $190,000 for ongoing projects (Equipment Acquisition, Canine Units, Anti-Money Laundering Programs, Demand Reduction, Training); $130,000 in support of SENAD's efforts to operationalize its PJC base; $160,000 to step up SENAD's operations tempo; $180,000 to create new SENAD offices; and, $140,000 to support SENAD's eradication activities. Post appreciates consideration of this request. Please advise. CASON