SEC. GUTIERREZ ASSURES LUGO OF US FRIENDSHIP

C O N F I D E N T I A L ASUNCION 000575

SIPDIS

WHA/FO CKELLY, WHA/BSC MDRUCKER, BFRIEDMAN, KBEAMER,
COMMERCE FOR SECRETARY GUTIERREZ, AMB LGUTIERREZ, NSC FOR
DFISK

E.O. 12958: DECL: 08/18/2028
TAGS: PREL ECON PGOV PA
SUBJECT: SEC. GUTIERREZ ASSURES LUGO OF US FRIENDSHIP

Classified By: Ambassador Liliana Ayalde; reasons 1.4 (b) and (d).


1. (C) SUMMARY: President-elect Lugo received Secretary of
Commerce Gutierrez and the U.S. delegation to his
inauguration August 14, one day before taking his oath as
president. Lugo told Secretary Gutierrez that he was pleased
with U.S. cooperation and assistance. Gutierrez stressed
that despite perceptions to the contrary, the United States'
goals are the same as Paraguay's -- jobs, social equity,
justice, and equality of opportunity. Lugo admitted that he's
not a politician, but said he had built many alliances in the
past year in order to fight poverty, exclusion, and
corruption. After Lugo shared his family and personal
history with Gutierrez, the Secretary assured Lugo that the
United States wants to be part of Paraguay's future and its
circle of friends. As in our other recent interactions, Lugo
exuded warmth and confidence during this meeting. While
Lugo's tone and words conveyed his interest in close
relations with the United States, pragmatism will lead Lugo
to seek close ties with others in the region as well.
Regardless of Lugo's eventual foreign policy direction, he
knows the United States is offering friendship. END SUMMARY.


2. (C) President-elect Lugo received Secretary of Commerce
Gutierrez and the United States delegation to his
inauguration August 14, one day before he assumed the
presidency. Foreign Minister-designate Hamed Franco,
Paraguayan Ambassador to the United States James Spalding and
MFA Director of Foreign Affairs Cynthia Filartiga attended on
the Paraguayan side. The U.S. delegation to the
inauguration, including Ambassador Ayalde, NSC Latin America
Director Dan Fisk, and OPIC CEO Robert Mosbacher, as well as
WHA PDAS Craig Kelly, Sr. Commerce Advisor Lino Gutierrez,
and Pol/Econ Chief Joan Shaker (notetaker),were also in
attendance.

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PLEASANT PLEASANTRIES
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3. (C) Lugo told Secretary Gutierrez that he was pleased with
U.S. cooperation and assistance, particularly the MCC
Threshold Program. Lugo assured the U.S. delegation that he
"will do the impossible to improve" Paraguay's corruption.
Lugo said he is cognizant of his people's hope for his
government and asserted his desire "to change Paraguay's face
to the world." Gutierrez conveyed warm regards from
President Bush and offered Lugo an October 23 visit to
Washington. Lugo responded that he would immediately work on
scheduling the visit, asking when U.S. elections will take
place. When Gutierrez answered November 4, Lugo quipped that
he would be one of Bush's last interesting visitors. Lugo
said he would "love to" visit Washington and expressed his
"great appreciation" for the United States and its
friendship. Lugo said he wants to expand relations with the
United States and will "open all doors to all countries."
"We have every possibility to be close -- and to learn from
each other," Lugo said. Lugo sent his best wishes to
President Bush and his family.

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"WE'RE LIKE YOU"
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4. (C) Gutierrez stressed that despite perceptions to the
contrary, the United States' goals are the same as
Paraguay's. "Like you," Gutierrez told Lugo in flawless
Spanish, "we want jobs, social equity, justice, and equality
of opportunity." "We have poverty, too, and also want to
reach 0 percent poverty," Gutierrez told Lugo. "People think
we're distant because we're far away-- but we're not. We
share Latin America's history and want to be close."


5. (C) Lugo admitted that he's not a politician, but said he
had built many alliances in the past year in order to fight
poverty, exclusion, and corruption. Lugo described some
members of his coalition as more to the left or the right,
but said "all just want food on the table." Gutierrez noted
that many leftist, pragmatic governments are successful,
citing the example of Uruguay, which has achieved results via
investment and trade. Gutierrez advised Lugo that the best
way to promote economic development is via the creation of
private sector jobs. Lugo expressed confidence in his
pluralistic team, lamenting that he would have liked to have
put more technicians in place, but that "the politicians were
too strong." Gutierrez nodded that he understood, noting
that politics always enter into the process.

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LUGO'S PERSONAL INSIGHTS
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6. (C) In response to Gutierrez's comment that Lugo has an
inspiring story, Lugo said "I'm not Mandela, but I want to
change my country." Lugo explained his electoral victory by
stating that the Paraguayan people want an honest leader, and
that they saw that quality in him as a Catholic bishop. He
said Paraguayans are humble, poor, simple, and pragmatic.
"I'm not the best, the most capable, or the smartest
politician," he said, "but I believe I can affect change."
He vowed not to lie to or defraud his people, and said that
he hoped to leave office in five years feeling satisfied that
he made Paraguay a better place.


7. (C) Lugo ironized that he has discovered many relatives
since he was elected president. In reality, he said, he
comes from a small family. With roots in Galicia, Spain, the
first Lugo arrived in Paraguay in 1602 to be a governor.
While Lugo has family throughout Paraguay, his own family
came from the Paraguari Department. His father was a justice
of the peace who wanted one of his six children (five sons
and one daughter) to become a lawyer. As the youngest (and
his father's last chance),Lugo dutifully registered to study
law but dropped out after 15 days, telling his father he
wanted to teach in the countryside instead. His father,
unhappy with this news, told Lugo he could do so on his own.
Although Lugo was first in his class, he did not get a
teaching job at the national high school because of his
family's political activities. His family had strong
Colorado roots but opposed the Stroessner regime, and several
of his brothers were exiled and tortured. Denied an
opportunity to teach, Lugo found God in the countryside and
decided to enter the seminary. At age 18, he went to his
father to break this news; his disappointed father told him
to "forget about his family" but invited him to come home
nine months later. Lugo said he never thought he would join
the church, but that he "couldn't say no to God, just as he
couldn't say no to the Paraguayan people."

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THE US IS HERE TO HELP
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8. (C) Secretary Gutierrez told Lugo that the United States
wants to be part of Paraguay's future and its circle of
friends. Gutierrez recited the famous saying that countries
don't have friends, only interests, and told Lugo the saying
is not true in this case. Gutierrez noted that we're all
inter-related -- that Paraguay's ambassador to the United
States has an American surname, and that Gutierrez' is
Latino. Gutierrez assured Lugo that the United States is
here to help, and would like to bring technology and
investment to help jump-start Paraguay's economy. "Our
interest," Gutierrez said, "is Paraguay's well-being, and we
want both you and Paraguay to be successful." Lugo, grateful
for Gutierrez' words, said international solidarity would be
important during his five-year term. He said Paraguay's
reputation as a corrupt country where illegality reigns and
pirated goods flow freely is embarrassing for him and his
people. He promised to "get inside" to attack those
problems, lamenting that it will be challenging because
politics are not a "clean game" in Paraguay. Lugo warmly
thanked Gutierrez for his visit. As the delegation wished
him well in the following day's activities, Lugo smiled and
said "I'm ready."


9. (C) COMMENT: As in our other recent interactions, Lugo
exuded warmth and confidence throughout this meeting,
conversing in an animated and free-flowing fashion with
Secretary Gutierrez, sharing his personal history, and
laughing out loud on several occasions. While Lugo's tone
and words conveyed his interest in close relations with the
United States, pragmatism will lead Lugo to seek close ties
with others in the region as well (not just Venezuela,
Ecuador, and Bolivia, but also Chile, Brazil, Argentina and
Uruguay). The meeting was light on substance, as Lugo's
emerging style is to focus on the big picture and on personal
relationships. In the past few weeks, we've allowed Lugo to
set the pace as we continue to build a strong foundation with
him and his team. Regardless of Lugo's eventual foreign
policy direction, which he will begin to define in coming
months, he knows the United States is offering friendship. We
think that's a good start. END COMMENT.


10. (SBU) Secretary Gutierrez did not have an opportunity to
clear this message.

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AYALDE