PRESIDENTIAL CANDIDATES DEFINE THEIR FOREIGN

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 000256

SIPDIS

SIPDIS

WHA/BSC MDRUCKER, BFRIEDMAN, KBEAMER; CA/VO CBODEK, TSMITH;
INL/LP DIANNE GRAHAM, ASMITH; ECA/PE/V/R/W METIENNE

E.O. 12958: DECL: 04/16/2027
TAGS: PREL CASC ECON SNAR PGOV PA
SUBJECT: PRESIDENTIAL CANDIDATES DEFINE THEIR FOREIGN
POLICY POSITIONS

REF: A. ASUNCION 163

B. ASUNCION 199

C. 07 ASUNCION 940

D. ASUNCION 106

E. ASUNCION 178

F. ASUNCION 196

G. ASUNCION 228

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


1. (C) SUMMARY: Paraguay's four major presidential
candidates express interest in expanding and strengthening
regional relations. They offer differing views on engaging
or disengaging with hemispheric actors, including the United
States and Venezuela. Fernando Lugo and Blanca Ovelar
express interest in renegotiating the terms of the Itaipu and
Yacyreta dam treaties with Brazil and Argentina. Pedro Fadul
and Lugo suggest exploring relations with the People's
Republic of China (PRC/vice Taiwan); all pledge to reform the
Paraguayan Foreign Ministry. All four candidates indicate a
desire to maintain good relations with the United States,
with General Oviedo seeming to do all he can to wrap himself
in the Stars and Stripes. END SUMMARY.


2. (C) All four of Paraguay's presidential candidates
(Patriotic Alliance for Change's Fernando Lugo, Colorado
Blanca Ovelar, National Union of Ethical Citizens' Lino
Oviedo, and Beloved Fatherland Party's Pedro Fadul) express
interest during the campaign in expanding regional relations.
In recent weeks, Lugo, Oviedo, and Ovelar made
well-publicized trips to Buenos Aires and Brasilia for
meetings and photo ops with Argentine President Cristina
Fernandez Kirchner and Brazilian President Luiz Inacio Lula
da Silva. Ovelar, Lugo, and Fadul announced their support
for strengthening Mercosur and promoting regional
integration. Ovelar favors continuing President Duarte's
efforts to increase Paraguay's trade with Mercosur members.
Lugo envisions a more equitable Mercosur (ref A). While
Fadul expresses interest in working more closely with Brazil
and Argentina, he singled out Uruguay for a possible special
partnership with Paraguay (ref B).


3. (C) Each candidate offers differing views on relations
with hemispheric actors, including the United States and
Venezuela. Oviedo repeatedly expresses interest in
strengthening ties with the United States (ref C and D) and
seeks closer ties with Brazil and Argentina; he also pledges
to marginalize Venezuela and Bolivia. Lugo advocates
prioritizing relations with countries where substantial
numbers of Paraguayan expatriates reside, including
Argentina, Spain, and the United States; he affirmed that he
also supports strengthening relations with Venezuela,
Ecuador, and Cuba. Fadul suggests signing trade agreements
with major partners such as the United States and the
European Union (ref B). Ovelar affirmed March 18 to the
Ambassador that she wants to deepen relations with the United
States (ref E); she also referenced relations with Venezuela,
Cuba and Ecuador in the April 3 CNN debate.


4. (C) Lugo and Ovelar express interest in renegotiating the
terms of the Itaipu and Yacyreta dam treaties with Brazil and
Argentina. Ovelar stated she would support a dam study that
could form the basis of a treaty renegotiation with Brazil
(ref F). (NOTE: Ovelar secured assurances from Argentine
President Cristina Fernandez Kirchner April 1 that she would
work to ensure the Yacyreta Dam treaty is equitable. END
NOTE.) Lugo has repeatedly stated that he favors
renegotiating the dam treaties with Argentina and Brazil (ref
A); his lightning-rod statements elicited a strong "no" from
Brazil. Fadul stated that he would focus on increasing
Paraguay's ability to use its share of Itaipu's output
instead of selling its deeply discounted surplus electricity
to Brazil (ref B). Oviedo has vacillated on renegotiating
the treaties. He previously suggested that he favored
renegotiating but now states that he favors reforming the
National Electricity Administration (ANDE) and the Itaipu and
Yacyreta binational enterprises in lieu of renegotiating the
treaties; and said that "serious countries" keep their
international obligations.


5. (C) The candidates' positions on relations with Republic
of China (Taiwan) versus the PRC differ sharply. Colorado
presidential candidate Blanca Ovelar stated that she favors

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maintaining diplomatic relations with Taiwan. (NOTE: The
Taiwanese donated over USD 25 million to Paraguay -- much of
it in cash -- during President Duarte's term. END NOTE.)
Lugo stated that he would explore the possibility of
recognizing the PRC if it would bring economic benefits to
Paraguay. Fadul said he supported extending diplomatic
relations to the PRC and ending Paraguay's "culture of
begging" for donations from Taiwan (ref B). Oviedo has not
revealed his position on recognizing the PRC. (NOTE: The
Taiwanese have a considerable political and business presence
in Paraguay, and the Taiwanese government frequently engages
in "dollar diplomacy." In exchange, Paraguay continues
officially to recognize Taiwan, including supporting Taiwan's
entrance into the United Nations. END NOTE.)


6. (C) All four candidates stated they would reform the
Foreign Ministry. Ovelar pledged training in commerce to all
diplomats so they could promote Paraguayan exports; she would
also introduce metrics to measure trade results and remove
embassy staff who did not meet their targets (ref F). Lugo
stated that he would introduce a plan to fully restructure
the Foreign Ministry. Oviedo would "professionalize" the
diplomatic corps and reduce political influence in the
Foreign Ministry. Fadul said that he would refocus the
Foreign Ministry on "selling" Paraguay and reduce internal
political influence.


7. (C) COMMENTS: All four candidates have indicated a
desire to maintain good relations with the United States. A
Lugo victory could lead to stronger Paraguayan ties with
Venezuela, Bolivia, Ecuador, and Cuba -- but not necessarily
to the exclusion of close relations with the United States.
The Liberal Party, the dominant force in Lugo's alliance,
will push him hard to stay close to us, and should be a
moderating force on Lugo's foreign policy.


8. (C) An Ovelar win could result in a continuation of
President Duarte's efforts to increase cooperation with
Venezuela and others (ref G),but the clear signals from her
innermost circle to date indicate she recognizes the
importance of close relations with the United States and will
work hard to maintain them. Ovelar insiders report that she
is "very pleased" with Embassy offers of assistance should
she win April 20. (NOTE: Ambassador told all of the
candidates they have been extended the same offer of support,
starting with the Millennium Challenge Corporation Threshold
Program's Plan Umbral II. END NOTE.)


9. (C) Of the three leading candidates, Oviedo is the most
interested in close U.S. relations, making repeated overtures
for meetings with the Embassy and inquiries about when he
could travel to the United States (in order to restore his
democratic credentials). In fact, his campaign spread
stories April 16 that Oviedo had to urgently visit to
Washington for meetings -- possibly with President Bush or
the visiting Pope -- on the eve of the elections. (NOTE:
Oviedo does not have a valid U.S. visa. He was denied P2C in
1996 after his coup attempt. END NOTE.) Oviedo, the most
politically savvy of all the candidates, has declared himself
"anti-Chavez" in order to ingratiate himself with the United
States. END COMMENTS.

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