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