WHA/BSC OFFICE DIRECTOR DRUCKER VISITS PARAGUAY

C O N F I D E N T I A L ASUNCION 000861

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/26/2027
TAGS: PREL PGOV PA
SUBJECT: WHA/BSC OFFICE DIRECTOR DRUCKER VISITS PARAGUAY

REF: ASUNCION 177

Classified By: DCM Michael J. Fitzpatrick; reasons 1.4 (b)
and (d).


1. (C) SUMMARY: During his October 2-4 visit to Asuncion,
WHA/BSC Officer Director Drucker met with a wide range of
political, economic and social interlocutors. Paraguay's
counternarcotics secretariat, its intellectual property
operations unit, and several economic crimes prosecutors
expressed gratitude for USG assistance. Journalists privately
warned that Venezuela's President Chavez would heavily
influence presidential pre-candidate and former Catholic
bishop Lugo's policies, but believed it increasingly likely
that Lugo will be disqualified as a presidential candidate. A
prominent academic asserted Lugo's campaign has lost
momentum, that Colorado candidate Blanca Ovelar is surging in
popularity, and that retired General Oviedo would be the
"worst option" for U.S. interests in Paraguay. National
Electoral Tribunal (TSJE) President Morales said that while
the TSJE is ready for April's elections, it would appreciate
U.S. technical assistance as well as international observers.
While we agree with the political analysis Drucker heard
during his visit, it is important to note that given so many
political and legal variables, political analysis in Paraguay
goes stale very quickly. In our view, it is too early to
crown Ovelar as the Colorado front-runner, just as it would
be premature to rule Lugo out. END SUMMARY.

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USG-SUPPORTED UNITS GRATEFUL FOR ASSISTANCE
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2. (C) During his October 2-4 visit to Asuncion, WHA's
Brazil/Southern Cone Officer Director Milton Drucker met with
Paraguay's counternarcotics secretariat, its intellectual
property operations unit, and several economic crimes
prosecutors, all of whom expressed thanks for USG assistance.
Hugo Ibarra, the director of SENAD, Paraguay's
counternarcotics secretariat, explained that most of the
illicit drug activity in Paraguay is run by Brazilians in and
around the tri-border area. Ibarra attributed SENAD's record
drug seizures this year to close collaboration with the DEA
and specialized counternarcotics judges who often issue
search or arrest warrants from home in order to protect
SENAD's operational plans. Colonel Felix Cruz, the director
of UTE, Paraguay's intellectual property operational unit,
underscored the urgency of institutionalizing UTE before the
next administration takes office in August 2008, since it is
currently operating under presidential decree. Like Ibarra,
Cruz's biggest challenge is protecting planned seizures of
pirated goods from operational information leaks. He said
most district attorneys and judges are corrupt, and that he
can trust very few. Many times, by the time Cruz executes a
seizure, he said, the pirated goods have been moved to
another location.


3. (C) Drucker also met with several prosecutors from the
Public Ministry's elite economic crimes unit. The
prosecutors lamented the Paraguayan government's lack of
support for their work, mostly because high-level government
officials are often their targets for corruption and other
economic crimes. The unit's lead prosecutor, Carlos Arregui,
thanked the Embassy for its support in consolidating the unit
into a central location, and for its assistance with case
management software. Drucker suggested the unit maximize the
software's potential by moving from paper-based files to a
digital system to facilitate the unit's work and protect
evidence. Arregui hopes to bring additional cases on line,
but said personnel and resources constraints make progress
difficult, particularly since the rest of the Public Ministry
would also have to modernize its system.

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ANALYSTS ON EXTERNAL INFLUENCE, ELECTIONS GENERALLY
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4. (C) Drucker had dinner October 2 with two journalists who
warned that Venezuela's President Chavez would heavily
influence the policies of Fernando Lugo, should he be elected
president in April. In stark contrast to the anti-Chavez
rhetoric which appears in Asuncion's daily newspapers via
editorials, both journalists agreed that Chavez is viewed
favorably in the country's interior. Both thought, however,
it is increasingly likely that Lugo will be disqualified as a
candidate, thus triggering likely social protests. Regarding
the potential candidacy of former coup plotter Lino Oviedo,
the journalists believed President Duarte will wait to see
how his own candidate, Blanca Ovelar, fairs in the race
versus Lugo before deciding whether he will set events in
motion to allow Oviedo to compete. (NOTE: It is widely
recognized that the Colorado Party controls Paraguay's
Supreme Court, which will be the final arbiter of the pending
charges against Oviedo and could also decide on Lugo's
candidacy. END NOTE).


5. (C) Benjamin Hernandez, a prominent op-ed columnist and
academic, told Drucker October 3 that Lugo's campaign has
lost momentum. Hernandez, who is slated to teach as a guest
professor at Harvard beginning in January 2008, said as
compared to three months ago, he no longer views Lugo as the
likely winner of the April elections. Hernandez, who said
he's known Lugo for years, gave several examples of Lugo's
leadership style. First, he told Drucker a story about
visiting Lugo's house, in which he found clothing all over
the floor. He said he asked Lugo why his house was so
disorganized and that Lugo replied that he didn't feel
compelled to pick his clothes up. Second, he said Lugo is
non-confrontational, and that he frequently walks out of
meetings, telling the disagreeing parties to "work it out"
and contact him when they've resolved their dispute. He said
that Lugo "isn't capable of resolving anything."


6. (C) Hernandez also noted Colorado candidate Blanca
Ovelar's surge in popularity, and told Drucker that Oviedo
may be the "worst option" for U.S. interests in Paraguay.
Hernandez said that despite her mild anti-U.S. rhetoric,
Ovelar might be a good partner for the United States.
Hernandez said that Ovelar's rhetoric is due to President
Duarte's influence, and is probably just electoral politics.
He noted that both Lugo and Oviedo come from somewhat
totalitarian (top-to-bottom) backgrounds (Lugo from the
church, Oviedo from the military) which do not encourage
discussion or debate, but said Oviedo would likely be worse
for the bilateral relationship. He also noted that Vice
President Luis Castiglioni is down approximately 10 percent
in the polls and appears to be losing strength.

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NATIONAL ELECTORAL COURT READY BUT WOULD WELCOME US ASSISTANCE
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7. (C) National Electoral Tribunal (TSJE) President Morales
told Drucker that while the TSJE is ready for elections, it
would appreciate U.S. technical assistance and support for
international observers. Morales, the designated Colorado on
the court, openly admitted his political leanings (fifty
years a Colorado, he said he had no problems with
Stroessner's "elections") and made no pretense of preserving
the TSJE's neutrality. (NOTE: An informal agreement among
political parties provides that of the three judges, one
represents the Colorado Party, another the Liberal Party, and
the third an independent political party in order to maintain
balance in the institution. END NOTE). Morales also noted
the continuing feud amongst the tribunal's judges (reftel),
but said he and Minister Dendia constitute a majority of the
tribunal and will run elections. In response to Drucker's
inquiry about inviting the OAS to observe the April
elections, Morales said the TSJE already invited the OAS to
observe and was making plans for other organizations,
including CAPEL, the National Endowment for Democracy,
regional electoral courts, and local embassies to observe as
well. (NOTE: Subsequent to this meeting, a high-ranking OAS
official denied that the Paraguayan government had formally
invited OAS observers. END NOTE). Finally, Morales noted
his strong preference for electronic voting, the new norm
under Paraguayan law, but said due to opposition from some
Colorado factions (namely Castiglioni and Alderete),Congress
may change the rules of the game before the April elections.
Morales noted that the main disadvantage to using paper
ballots is that final results won't be released for up to two
weeks following the election.

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COMMENT
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8. (C) While we agree with the political analysis Drucker
heard during his visit, it is important to note that given so
many political and legal variables, any electoral analysis in
Paraguay goes stale very quickly. In our view, it is too
early to crown Ovelar as the Colorado front-runner, just as
it would be premature to rule Lugo out. While Ovelar may be
surging in popularity to Castiglioni's detriment as of late,
she is facing new allegations that she used state resources
for campaign travel October 4. Likewise, Oviedo's release
from jail and subsequent politicking may have slightly
detracted from Lugo's candidacy in past weeks, but if Lugo is
indeed being bankrolled by Chavez (which we have yet to
confirm),he is likely to be a major presidential contender
for financial reasons alone as long as he's in the race. In
short, the many (and mostly legal) variables in this
electoral contest are likely to ensure that it remains
anybody's game for the foreseeable future. END COMMENT.

WHA/BSC Milt Drucker cleared this message.
Please visit us at http://www.state.sgov.gov/p/wha/asuncion

CASON