PARAGUAY: CASTIGLIONI FACES UPHILL BATTLE IN BID

C O N F I D E N T I A L ASUNCION 000577

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/03/2027
TAGS: PGOV PREL KDEM PA
SUBJECT: PARAGUAY: CASTIGLIONI FACES UPHILL BATTLE IN BID
FOR THE PRESIDENCY

REF: A. ASUNCION 0255


B. ASUNCION 0252

C. ASUNCION 0431

D. ASUNCION 0489

Classified By: DCM MICHAEL J. FITZPATRICK; Reasons 1.4(b),(d)


1. (C) SUMMARY: President Duarte has endorsed his Education
Minister Blanca Ovelar as the Colorado Party candidate to
succeed him. Seeking to obstruct the bid launched by his
Vice-President Luis Castiglioni, he forced the party to
embrace a "socialist" ideology at its recent convention and
has fired officials senior and lower ranking for too closely
identifying themselves with Castiglioni or Acting Colorado
Party President Jose Alberto Alderete. Castiglioni has
effectively peeled away the support of Colorado leaders
around the country but he faces an uphill battle in winning
the Colorado Party nomination for lack of the structure,
organization and perhaps even the drive Duarte brings to bear
in the race. END SUMMARY.

Throwing Up Roadblocks


2. (U) The Colorado Party's internal electoral tribunal poses
a significant challenge to Castiglioni's prospects. This
body was installed during the Colorado Party Convention April
28 and will assume the lead responsibility for running the
Colorado Party's December primary. (NOTE: The Party's
electoral tribunal is separate from the national Electoral
Tribunal (TSJE). The TSJE provides assistance to the Party
electoral tribunals but does not control the balloting or
monitoring, unless specifically asked by the Party. END
NOTE.) Duarte supporters control the electoral tribunal (3
to 2) and the Colorado Party machine is notorious for its
corruption in elections. In the February 2006 election for
the presidency of the Colorado Party, Duarte's machine
controlled the electoral tribunal and announced a landslide
victory which did not jibe with polls. (NOTE: The three
major newspapers are all owned or controlled by the
opposition, which may have been a factor in the poll results.
END NOTE.) Duarte won all of the Department's with the
margin of victory between 8 to as much as 52 percentage
points (most jurisdictions were in the 30 percentile range).


3. (U) The Colorado Party's establishment is dominated by the
Colorado Reconciliation Movement (MRC) which enjoys the
allegiance of roughly 600 of the party's 800 convention
members. Duarte continues to dominate the MRC. During the
April Party Convention, Duarte won adoption of his proposal
to embrace a "socialist" ideology for the Colorado Party.
This initiative was inspired by a desire to win potential
Venezuealan support -- financial and political -- and isolate
Castiglioni who is widely perceived as right of center.


4. (C) Of course the biggest problem that Castiglioni faces
is his lack of the kind of organization and structure Duarte
can bring to bear as the Colorado Party's dominate leader.
Duarte relies heavily on the Colorado Party's network of
grassroots leaders. A novice when it comes to campaigning on
the national level, Castiglioni has nowhere near the
structure and apparatus available to Duarte's team.
Castiglioni is also perceived as not having the kind drive
and determination demonstrated by Duarte. Whereas
Castiglioni is notorious for being a late riser and arriving
late for meetings, Duarte rises early and is in his element
as he campaigns practically without pause days on end.

PEELING AN ONION


5. (U) Castiglioni has focused his efforts on gaining the
support of disenchanted Colorado Party leaders. The Mayor of
Ciudad Del Este Javier Zacarias Irun declared his support for
Castiglioni once Duarte rebuffed his bid for a senior
position on Duarte's team. Castiglioni has made Zacarias his
running mate. Castiglioni has also won the endorsement of
former Interior Minister Orlando Fiorroto -- the leader of a
small Colorado movement, the leader of the Colorado Party's
Women's Movement Lilian Samaniego, Colorado Deputy Juan Dario
Monges (who sought Duarte's support as a candidate for
Governor of Paraguai but was rebuffed) and former Aviation
Director Tomas Bitar. Duarte opponents Goli Stroessner
(grandson of the former dictator and the leader of his own
movement),former Health Minister Julio Velazquez, and
Osvaldo Dominguez Dibb (a rich and influential businessman
who heads a separate Colorado movement) have flirted with
Castiglioni but have not yet officially signed up to his
campaign.

Alderete: The Wild Card


6. (U) Winning the support of Acting Colorado Party President
Jose Alberto Alderete would represent a major coup for

Castiglioni. Alderete enjoys the respect of much of the
party's grassroots leadership responsible for rallying folks
in the countryside to vote for their candidate. Alderete
rebuffed Duarte's request he fill in as Ovelar's running
mate. While he has declined to throw his support to
Castiglioni, they have met on a number of occasions. Of
course, Alderete appears to weighing his own prospects as a
candidate for the Colorado Party nomination. Duarte, angered
with Alderete -- a childhood friend and long standing
political ally -- for not throwing his unconditional support
to Ovelar, has taken to making some strong attacks on
Alderete's character and manhood and fired some of Alderete's
supporters in government. If Castiglioni were to secure
Alderete's support he could borrow on his impressive network
of support throughout the country.

Ovelar's Vulnerabilities


7. (C) Blanca Ovelar, Duarte's Education Minister over the
last four years, came under criticism in April when the
Controller General's office announced that it had discovered
several of the Education Ministry's programs had been grossly
misappropriated and misadministered Ovelar has been cleared
for the time being of direct involvement but the case does
not speak well of her commitment to counter corruption.


8. (C) Ovelar has also faced resistance from some quarters
at the grassroots lever for not hailing from a Colorado
family -- an important consideration for many diehard
Colorado members who consider party affiliation a core
characteristic on a par with religion. Ovelar only joined
the party within the last ten years and has never campaigned
prior for elected office. Of course there is also some
resistance to electing a woman as Paraguay's President, given
prevailing chauvinistic attitudes.


9. (C) Ovelar insists she is her own person. However, it
is difficult to escape the fact that Duarte not only
hand-picked her but also Carlos Maria Santacruz, his 35 year
old Private Secretary, creating the appearance Duarte intends
to continue ruling from behind the scenes. Duarte does
little to discredit this notion as at campaign just last week
he spent an hour championing Ovelar's candidacy, leaving her
no time give her own speech.

ALL THE VP'S MEN


10. (C) Castiglioni's top policy advisors do not have any
clout in the Colorado Party. They are a group of young,
bright, untested, apparently honest friends of Castiglioni
who have banded together for a campaign that sometimes
appears over their heads.

-- Juan Facetti regularly works as a consultant with the IDB.
He is presently working on contract by USAID in support of
El Salvador's MCA compact. While he may represent
Castiglioni's smartest and most trusted advisor, Facetti
lacks much experience in Paraguay's rough and tumble world of
party politics. Under contract on the MCA program, he also
is not dedicating himself full-time to Castiglioni's campaign
traveling for extended periods to El Salvador. Facetti has
received USG funded training on multiple occasions and has
sought the assistance of former Clinton campaign advisor
James Carville on behalf of the Castiglioni campaign.

-- Justo Cardenas, Castiglioni's Secretary General, lost his
bid last year to be a City Councilman in Asuncion. He
traveled with Castiglioni in 2005 to the U.S. He has strong
ties to the U.S. including family living there. He is
expected to lead the VP's list of Diputados for the upcoming
elections.

-- Eric Salum, another close friend of Castiglioni's and his
legal advisor recently lost his bid to gain election to an
advisory board of the National University. He is smart but
very short of experience in elections.

-- Hugo Estigarribia is another friend of Castiglioni's who
has served as his liaison with Congress. Estigarribia
aspires to Congress but lacks the long experience most of
Duarte's bring from campaigning in multiple elections.


CAMPAIGN FINANCING AND A SEARCH FOR VOLUNTEERS


11. (U) Castiglioni has resorted to U.S. campaign style
tactics in an attempt to raise funds and build his campaign
team mainly due to a lack of access to national and Party
funds and structure. He and his supporters are planning to
use receptions and other events to raise money from dissident
political figures and business leaders (who represent a core
part of his support). Castiglioni also seeks to establish an

army of grassroots supporters to monitor the polls and reach
out to communities throughout the country.

MAN IN THE MIRROR - THE SHORT BIO


12. (SBU) Prior to his election as the VP, Castiglioni was a
member of the House of Deputies and a leader in the Colorado
Party from 1998 to 2003. His sizable wealth is attributed to
his private construction firm. Duarte is said to have
selected him as a running mate to court support from the
business community in general and the construction sector in
particular. A Catholic member of Opus Dei, Castiglioni is
projects himself as being very religious and is close to
senior Church officials. He has a terrible reputation for
arriving late and has been accused of being lazy.
Castiglioni has gone on record criticizing Mercosur (for not
delivering on its promise to Paraguay) and Venezuela's
Chavez. He traveled to the U.S. on an IV as a Congressman.
Modern thinking and well versed in business matters, he is
widely considered as pro-U.S.


13. (U) Castiglioni is 44 and his wife Miriam Ayala have
three children: Luis Osvaldo (22),Luis Idilio (19),and
Maria Cecilia (7). His mother lives with him and is the
President of a mattress company. His father (a former
Colorado President in San Pedro during Stroessner's era) is
deceased. His brother, Luis Osvaldo, lives in San Pedro and
is a cattle rancher. He also has a sister, Ana, who is a
supporter of former Minister of Interior Orlando Fiorotto.

COMMENT


14. (C) VP Castiglioni faces a steep uphill battle to defeat
the political establishment's machine. President Duarte
controls the Colorado Party's apparatus throughout the
country and his supporters represent a majority in the
Party's electoral tribunal. Historically, the Colorado
Party's internal elections have been riddled with corruption
and malfeasance. There is no reason to believe this election
will not face similar challenges. To win, Castiglioni will
have to muster support from, not only dissident members of
the Colorado Party (many of whom are/have been associated
with corruption),but also acquire major defections from the
MRC, the dominant political movement within the Colorado
Party, including Party President Alderete. Castiglioni's
ability to court support throughout the country in the weeks
and months ahead will prove telling in determine whether
Castilgioni's bid either surges or fizzles.


CASON