MIXING THE MILITARY AND POLITICS IN PARAGUAY

1. (C) SUMMARY: The May 8-12 holding of a South American
leftist, anti-imperialist youth convention at a Paraguayan
military facility continues to cost the Lugo government
scarce political capital. President Lugo publicly denied
authorizing the use of the military facility to hold the
political event -- an act prohibited under Paraguayan law --
and ordered an investigation. He then relieved the Army,
Navy, and Engineering Unit commanders from duty May 20.
Public criticism that the Yacyreta Binational Dam Entity
(EBY) underwrote the congress and pressure from Lugo also
prompted the Dam's Paraguayan director to reimburse the
public entity, reportedly with $20,000 from his own personal
funds. While Lugo took decisive steps after-the-fact to
limit the political fallout, many are criticizing his
decision to punish military scapegoats for a political
decision while letting those leftist members of his
administration responsible for pushing the event in the first
place go unpunished. END SUMMARY.


2. (C) The "Latin American Youth for Change" Congress, held
at the Heaquarters of the Paraguayan Army's Engineering Unit
May 8-12, drew 1,200 to 1,500 young leftists from Argentina,
Bolivia, Brazil, Uruguay and Paraguay. After public
criticism of the event became public, President Fernando Lugo
told the Ambassador May 11 (reftel) that he "did not sign the
order" approving the Asuncion event; instead, he blamed the
military leadership for approving use of the military
facility and not stepping in when political banners were
first displayed. However, several Embassy contacts and Lugo
insiders subsequently told EmbOffs that they believe that the
President personally authorized this event as
Commander-in-Chief. An advisor to the Defense Minister told
Pol/Econ Chief May 21 that Paraguay's National Emergency
Secretariat (SEN) Minister Camilo Soares and Vice Minister of
Youth Karina Rodgriguez, both leaders of the Paraguayan
Movement Toward Socialism (P-MAS), petitioned the Defense
Ministry for use of the military facility. (NOTE: Soares
also led an anti-U.S. and "anti-oligarch" rally at the event.
END NOTE.) The defense advisor said both Defense Minister
Luis Bareiro Spaini and Military Forces Commander Cibar
Benitez formally refused the initial P-MAS request but were
out of the country when the final decision was made to permit
it. The advisor said that political pressure from "the
presidency" to go forward with the congress was immense.


3. (C) The press covered the congress extensively, fueling a
strong political backlash. Lugo initially downplayed the
event as a pluralist meeting involving a range of political
groups and movements. However, the newspaper Ultima Hora
published May 11 front-page photos showing Venezuelan,
Bolivian, and Paraguayan Communist Party flags hanging on the
walls of Paraguayan military buildings, as well as flags
bearing the image of leftist revolutionary Ernesto "Che"
Guevara, leading opposition leaders to call for a full
investigation. (Many clearly believe -- as does post -- that
Lugo gave an informal "go ahead" to the leftist event,
perhaps not realizing fully what it was or how it would be
received.) Some political leaders further called for Lugo's
impeachment and pointed out that Lugo, as Commander-in-Chief,
is ultimately responsible for oversight of the Military
Forces. They argued that the leftist congress violated the
Paraguayan Constitution and public laws that prohibit the
Military Forces from involvement in political activities.
(NOTE: Paraguayan law prohibits active duty military
personnel from participating in political activities,
affiliating themselves with political parties, or organizing
political events. END NOTE.) National Union of Ethical
Citizens (UNACE) Party leader (and retired General) Lino
Oviedo, already hot to impeach Lugo, told the press May 15
that he would initiate impeachment proceedings against Lugo
if he failed to dismiss those responsible for authorizing the
event. (NOTE: Although former coup plotter and presidential
aspirant Oviedo does not hold office and cannot directly
initiate impeachment proceedings against Lugo, his UNACE
foot-soldiers in the Paraguayan Congress could move to
impeach Lugo. END NOTE.)


4. (C) Lugo publicly denied authorizing the use of the
military facility and ordered a full internal investigation.
He subsequently dismissed three high-level military officials
May 20 -- Army Commander Machuca, Navy Commander Ruben
Valdez, and Engineering Unit Commander Felipe Canete -- for
their involvement in authorizing the event. Opposition
leaders as well as Senate Foreign Relations Commission
President Alberto Grillon -- one of Lugo's strongest
supporters -- called on Lugo to dismiss Soares and Rodriguez
as well. (NOTE: Interior Minister Filizzola also privately
pushed hard for their dismissals. END NOTE.) Despite
speculation that Soares and Rodriguez would resign, Lugo has
not dismissed them, and SEN's spokesperson confirmed May 21
that Soares would not resign.


5. (C) Colorado Senator Julio Velazquez denounced in the May
15 Senate session that the Yacyreta Binational Enterprise
used state funds and resources to finance the leftist
congress. Velazquez exhibited a receipt indicating that
Yacyreta donated just under USD 20,000 to event organizers.
Velazquez also denounced that the Military Forces provided
seven vehicles and drivers for use during the congress. Lugo
said in a May 14 press conference that using Yacyreta money
was appropriate because energy issues had been discussed
during the congress. Facing continued strong criticism and
apparent pressure from Lugo, however, Yacyreta Director
Carlos Cardozo later announced that, though no error had been
committed (sic), he repaid the Yacyreta money from his own
personal funds. Members of the Chamber of Deputies called
Cardozo for hearings May 21 to explain the donation and
allegations of corruption in his administration.


6. (C) COMMENT: While Lugo's real role in approving this
political fiasco is unclear, he took decisive steps
after-the-fact to attempt to limit the political damage by
removing several top military officers and forcing Cardozo to
repay the improperly-used Yacyreta funds (a first in
Paraguay). Many, however, are criticizing his decision to
punish military scapegoats for a political decision while
letting Soares and Rodriguez continue in their jobs.
Interestingly, Lugo's personal secretary told Charge May 13
that Gustavo Codas, Lugo's foreign policy advisor in the
presidency, had actually been the driving force behind the
congress; Codas apparently used Soares and Rodriguez to float
a trial balloon to see what public reaction, if any, such a
directly pro-Chavez, anti-imperialist event would cause. Now
we know the answer: "A lot." Lugo's association with Soares
and Rodriguez has brought him little or no benefit; this is
not the first time Soares and his radical rhetoric have
served as a political lightening rod. All in all, this
incident represents a public defeat for leftist elements near
Lugo, and has likely conditioned the President to be a bit
more cautious when listening to his younger, more ideological
advisors. Lugo's main problem, however is clear: Other more
moderate voices have less and less access to the president in
the first place. But that's a whole 'nother issue -- and
septel (to follow). END COMMENT.
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Fitzpatrick
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