LUGO AND HAMED FRIENDLY WITH A/S SHANNON BUT LIGHT

C O N F I D E N T I A L ASUNCION 000606 SIPDIS WHO/FO CKELLY, CMCMULLEN, WHA/BSC MDRUCKER, CCROFT, MCC FOR MHARRINGTON E.O. 12958: DECL: 08/29/2028 TAGS: PGOV ECON PREL SNAR PA SUBJECT: LUGO AND HAMED FRIENDLY WITH A/S SHANNON BUT LIGHT ON SUBSTANCE Classified By: Acting DCM John Beed; reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: In his August 28 meeting with President Lugo, Assistant Secretary Shannon reinforced Secretary Gutierrez' message to Lugo about U.S. interests in strengthening commercial ties, and also expressed support for Lugo's social agenda. Above all else, Lugo said he wants to strengthen Paraguay's democracy. He described the Millennium Challenge Corporation Threshold Program as "the main course" of U.S. assistance to Paraguay and promised to continue to improve Paraguayan institutions. A/S Shannon assured Lugo that the United States stands ready to explore a wide range of assistance. Lugo admitted that Chavez is a "controversial figure," but said that Venezuela is important for Paraguay, and that while Chavez won't always be around, Venezuela will. A/S Shannon's visit, along with the U.S. delegation to Lugo's inauguration and the Ambassador's multiple encounters with Lugo, have underscored U.S. interest in strengthening our long-standing close relations with Paraguay, and in supporting Lugo's administration. END SUMMARY. -------------- LUGO TELLS SHANNON HE FEELS CLOSE TO THE US -------------- ¶2. (C) In his August 28 meeting with President Lugo, WHA Assistant Secretary Tom Shannon reinforced Secretary Gutierrez' August 14 message to Lugo about U.S. interests in strengthening commercial ties, and also expressed support for Lugo's social agenda. Lugo was joined by Vice President Federico Franco, Foreign Minister Hamed, and Paraguayan Ambassador to the United States James Spalding. A grateful Lugo said U.S.-Paraguayan relations shouldn't be disrupted by a change in Paraguay's government and that presidents are only "administrators." Lugo alluded to Paraguay's long history of friendship with the United States, referring to childhood memories of strong bilateral relations. ¶3. (C) Above all else, Lugo said he wants to strengthen Paraguay's democracy. He said Paraguayans want to be protagonists --to participate in their country's transition. Lugo said Paraguay needs a "mature tolerance," and that he and his Patriotic Alliance for Change value diversity. Lugo lamented the current Congressional crisis, which he said is "part legal, part political," and "not helpful" for his country. Lugo affirmed his desire to make Paraguayan institutions work. He said he wants to offer security -- not just to Paraguayans -- but to foreigners who want to invest here. Lugo said "there is much to learn from the United States," and that he is open to doing so. "But it's our process," he said, "which we hope all will respect, too." ¶4. (C) Lugo described the Millennium Challenge Corporation Threshold Program as "the main course" of U.S. assistance to Paraguay and promised to continue to improve Paraguayan institutions. Lugo acknowledged his country's institutional weaknesses and said he is very hopeful that, as the song goes, "all is not lost." Lugo regretted Paraguay's international reputation, and remarked that the Duarte administration made good progress countering corruption under Phase I of the Threshold Program. He also hoped for close collaboration with the United States on counternarcotics to stem the growing transit of illicit drugs through Paraguay, including in his home department of San Pedro. He mentioned the lack of state control and the need for radar to track incoming/outgoing air traffic along Paraguay's borders, and expressed hope that Congress would pass a pending bill to address this "failure." "With U.S. cooperation," Lugo said, "I know we can improve." ¶5. (C) Assistant Secretary Shannon assured Lugo that the United States stands ready to offer a wide range of assistance, including on counternarcotics and trade. Shannon hoped that Lugo will visit Washington in October, where he promised Lugo would find great interest in Paraguay and in Lugo personally. Shannon conveyed U.S. good will -- not only from the executive branch, but also from Congress and international institutions. Lugo responded that he wants to go to Washington, and that he would be finalizing his travel schedule in coming weeks. ¶6. (C) Lugo admitted that Chavez is a "controversial figure," but said that Venezuela is important for Paraguay, and that while Chavez won't always be around, Venezuela will. Lugo assured Shannon that he doesn't want to lessen Paraguay's relations with the United States. "To the contrary," he said "I want to strengthen them. I feel very close to the United States." -------------- TWO MEETINGS WITH HAMED IN TWO DAYS -------------- ¶7. (C) Foreign Minister Hamed received A/S Shannon separately August 28 in a friendly meeting that included his Vice Foreign Minister, Jorge Lara Castro, and Ambassador Spalding. Hamed opened the meeting by confiding to A/S Shannon that he would prefer a more relaxed life, but that "things are always difficult at the beginning." Hamed underscored Paraguay's desire for close relations during this historic transition with all of its friends, including the Untied States, which Hamed called a "long-time friend of Paraguay." A/S Shannon told Hamed the United States is optimistic about what we can accomplish together, and conveyed our desire to play a positive role in Paraguay's transition. ¶8. (C) A/S Shannon inquired about Hamed's priorities and messages that Shannon could carry to Washington; Hamed responded with a blank stare before he turned to Ambassador Spalding. Spalding mentioned improved access to U.S. markets, increased U.S. investment, cooperation on counternarcotics, and the upcoming Joint Council on Trade and Investment, which the United States is hosting this year. VM Lara suggested that the U.S. increase commercial exchanges with Paraguay, and expand cooperation on biofuels (citing Paraguay as the largest producer in region after Brazil). Hamed mentioned that he is starting to focus on Brazil and Argentina (noting good will from Argentina on Yacyreta),and that then he would work his way through the rest of Paraguay's neighbors. "We're on a good path," he said, solidifying regional relations. ¶9. (C) Hamed inquired about the best mechanism to discuss bilateral issues; A/S Shannon said we would be happy to schedule a bilateral meeting, and that the MFA could begin work with the Embassy. Shannon also urged the Foreign Minister to formally accept President Bush's invitation for a meeting with President Lugo in Washington. Shannon emphasized U.S. interest in consolidating democratic institutions, investing in people, and countering non-traditional threats. Shannon repeated that the United States is not concerned with ideology, but our partners' commitment to democracy. Shannon referred to Secretary of Commerce Gutierrez' visit and confirmed U.S. interest in expanding Paraguay's access to U.S. markets. Hamed acknowledged that increased access would be a "big door" to open for Paraguay, and expressed his gratitude for what the United States can do to help Paraguay in that regard. ¶10. (C) Prior to the Hamed-Shannon meeting, the Ambassador paid her initial courtesy call on the Foreign Minister August ¶26. In that meeting, Hamed did not articulate any priorities for the bilateral agenda, and offered few for the MFA in general, saying that he is still "putting his house in order." Hamed told the Ambassador he wants to expand Paraguay's diplomatic presence by opening embassies in Africa and (including Angola) and Asia and by strengthening ties with the Middle East. Hamed said Latin America and the Middle East know little about each other, and cited an upcoming conference in Dubai which will bring the two regions together. Hamed expressed interest in the Bush-Lugo meeting in Washington, but mentioned that Lugo may attend a regional meeting in Chile and the Ibero-American summit in El Salvador around the same time. (Resident ambassadors from Brazil, Colombia and Mexico also told A/S Shannon late August 28 that they are working on Lugo meetings with their respective presidents in the same time frame, and already have firm dates). Hamed did not yet know who would travel to UNGA in New York. He told the Ambassador that he hopes to advance Lugo's agenda "with your help." ¶11. (C) COMMENT: Assistant Secretary Shannon's visit, along with the U.S. delegation to Lugo's inauguration and the Ambassador's multiple encounters with Lugo in her first two weeks in country, have underscored U.S. interest in strengthening our long-standing close relations with Paraguay, and in supporting Lugo's administration. While our interactions have not delved deep into foreign or domestic policy, they have offered Lugo an overview of how we can help him with some of his key challenges, including on the corruption front (Threshold program),the health sector (USAID and DOD assistance),and poverty reduction (USAID assistance and commercial ties). END COMMENT. ¶12. (U) Assistant Secretary Shannon cleared this message. Please visit us at http://www.state.sgov.gov/p/wha/asuncion AYALDE