FADUL IMPRESSES AMCHAM

C O N F I D E N T I A L ASUNCION 000199

SIPDIS

SIPDIS

TO WHA/BSC KREAD

E.O. 12958: DECL: 04/02/2028
TAGS: PGOV PREL PA
SUBJECT: FADUL IMPRESSES AMCHAM

REF: A. ASUNCION 163

B. ASUNCION 196

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


1. (C) SUMMARY: Pedro Fadul, presidential candidate for the
Beloved Fatherland (PQ) Party, told the Paraguayan-American
Chamber of Commerce March 18 that although business and
government should work together to promote economic and
social development, the private sector should be the
economy,s driving force. Fadul asserted that the government
should guarantee capital investments, build infrastructure,
provide security and education, and facilitate investment.
Fadul explained that Paraguay had enormous development
potential in the energy, agro-business, industry,
infrastructure and tourism sectors. He emphasized cultural
concepts involving responsible government and long-term
planning, which he said must be changed so that the country
can advance. On education, Fadul underscored the importance
of building education, not schools. He described the
Paraguayan government as &obsolete8 and called for
institutional reform. Fadul wryly noted that since Paraguay
can,t relocate, it must prioritize relations with its
neighbors to coordinate cooperation and strengthen MERCOSUR;
it should also negotiate trade agreements with the United
States and the European Union and renegotiate the Itaipu and
Yacyreta Dam treaties. Fadul said there is an overwhelming
consensus that he and his party's slate for senators and
deputies are the best in the field, but that the same people
who sing their praises say &too bad they won,t win.8
Indeed. END SUMMARY.


2. (U) Beloved Fatherland presidential candidate Pedro Fadul
spoke to the Paraguayan-American Chamber of Commerce March
18, the third in a series of speeches by the major
presidential candidates (reftels). The final AmCham speaker
was Lino Oviedo on March 27 (septel). DCM and Pol/Econ Chief
attended all four presentations.

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BUSINESS AND GOVERNMENT
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3. (U) Fadul told his audience that business and government
must work together to promote economic and social
development, but that the private sector should be the
economy,s driving force. Fadul said that the business
sector should educate, involve and support the poor. He
pointed out that in Paraguay there are "empresarios"
(business persons) and "empresaurios" (a play on "dinosaur"
in Spanish). These "empresaurios" resist change because they
receive great economic benefits from the system without
promoting social or economic development. For that reason,
in Paraguay today, the business sector has two options: 1)
build higher fences, hire more guards and install more
gadgets for security and protection; or 2) leave the country.
Fadul urged the business sector to take the lead to promote
change.


4. (U) Fadul asserted that the government should guarantee
capital investments, build infrastructure, provide security
and education, and facilitate investment. He emphasized that
huge public enterprises must be privatized. Fadul cited the
mobile telephone sector as a successful case study, arguing
that in the 15 years since it was privatized, billions of
dollars were invested in the sector, creating thousands of
jobs and training hundreds of people. Fadul argued that
other government-owned sectors, including internet service,
should be privatized next.


5. (U) Fadul highlighted Paraguay's enormous development
potential in the energy, agro-business, industry,
infrastructure (roads and airports) and tourism sectors.
Given Paraguay's surplus of electrical energy, he said the
government should facilitate investment in energy,
specifically in production and transmission lines. Fadul
suggested (as the Ambassador has previously suggested) that
Paraguay offer companies interested in building production
facilities in Paraguay incentives such as preferential
electrical prices. Fadul also said Paraguay should
renegotiate its treaties with Argentina and Brazil for
additional energy from Yacyreta and Itaipu. Paraguay could
earn 8 to 10 billion dollars in 10 years by exploiting its
energy resources, according to Fadul.
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SOCIAL CHANGE AND EDUCATION
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6. (U) Fadul dedicated a large portion of his discourse to
cultural concepts involving responsible government and
long-term planning, which he said must be changed so that the
country can advance. The ¬ion that poverty is the
product of lack of resources is wrong,8 he said, &the
manner in which resources are allocated is what creates
poverty.8 Fadul stated that his father used to say "wealthy
is not having more; wealthy is knowing how to manage what one
has. It doesn,t matter how much you make. If you don,t know
how to manage your money, you'll always spend more.8 Fadul
made clear that in Paraguay there is no lack of resources,
projects or ideas. The country has the "hardware," he said.
The problem is in the &software,8 or the social behavior
and personal characteristics.


7. (U) Fadul lamented that there is no long-term vision in
Paraguayan culture. Society is based on the Guarani concept
of &if there is a tomorrow,8 or &koeramo.8 He also noted
a long-standing culture of dependence on government
assistance, which he says Duarte's government promotes to
stay in power. Fadul emphasized the need for change.
Changing the "software" was possible: 99.9 percent of
Paraguayans believe that things should change, that everyone
must help, and that everyone should progress together.


8. (U) Fadul underscored the importance of building
education, not schools. Fadul said, "we must ask the people
what they want to be, and teach them how to be what they want
to be, not what we want them to be." He cited Atyra, known
throughout Paraguay as a model city, as an example. Atyra's
mayor worked on cleaning up the city. Soon, word got out
that the city was clean and tourists started to arrive.
Consequently, the artisans who used to travel great distances
to sell their product could set up shop at home. That in turn
provided social benefits -- they made money, fed their
families and kept their families together. In the end, a
simple goal of keeping the city clean produced economic
success and great social benefits.

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INSTITUTIONAL REFORM
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9. (U) Fadul criticized the Paraguayan government as
"obsolete" and called for institutional reform. He explained
that instead of the institutions being used for the common
good, they are used to win elections. As an example, Fadul
noted that during Stroessner's 1954-89 dictatorship, the
military was Paraguay,s most powerful and wealthy
institution. Today, in contrast, he pointed out that the
Ministry of Education,s budget has grown 10 times over the
last 15 years. Instead of improving education, the Ministry
of Education,s large budget has been used as the center for
electoral power. If in doubt, Fadul said, just look where
the last two Colorado presidential candidates have come from
(both Duarte and Ovelar served as Ministers of Education).

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FADUL ON FOREIGN POLICY
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10. (U) Fadul wryly noted that since Paraguay can,t relocate
(or invade Argentina or Brazil),it must prioritize relations
with its neighbors to coordinate cooperation and strengthen
MERCOSUR; it should also negotiate trade agreements with the
United States and the European Union and renegotiate the
Itaipu and Yacyreta Dam treaties. He asserted that Paraguay
must change its style of conducting foreign policy. It must
send the best and brightest negotiators to the negotiating
table. It should end its culture of begging. To illustrate,
Fadul stated that it made no sense that Paraguay chose to
deal with Taiwan at the expense of China, &just because
Taiwan gives a few millions here and there and builds some
schools.8 It is no surprise, he said, that Paraguay is the
only country in South America that still has diplomatic
relations with Taiwan. On Itaipu and Yacyreta, he clarified
that negotiations &will be difficult,8 since one must
negotiate within Paraguay first and then with Brazil and
Argentina. Fadul said "the first step should be to explain
to the people what the problem is. You can't ask the people
to walk with you through a dark tunnel if you do not tell
them what is on the other side."

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FADUL ON FADUL
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11. (U) Fadul said he hears an overwhelming consensus on the
campaign trail that he and his party's candidates for
senators and deputies are the best in the field, the most
ethical, and the hardest working representatives in Congress.
The same people who sing their praises, he said, also say
&it's too bad they won't win.8 Fadul discounted his
distant fourth place finish in the polls, implying that the
polls are biased. He acknowledged that the polls give him 3
to 5 percent, noting with a grin that everywhere he goes, he
is immediately greeted by his "3 percent."

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COMMENT
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12. (C) Fadul delivered an eloquent and humorous speech to a
friendly audience. He conveys confidence, conviction and
intelligence, and certainly could capably lead Paraguay
through the end of its democratic transition and improve the
country's economic development. Impeccably dressed, Fadul
spoke for 20 minutes and answered audience questions for
another 30 minutes, all without notes. Unlike his opponents,
he understood the concerns of the private sector and
addressed them head-on -- assuring them that the private
sector would be the economy's motor if he were elected. It
really is too bad he won't win. END COMMENT.

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