BACHELET VISIT TO PARAGUAY

UNCLAS ASUNCION 000468

SIPDIS
SENSITIVE

HA/FO CMCMULLEN, WHA/BSC MDRUCKER, BFRIEDMAN, MDASCHBACH

E.O. 12958: N/A
TAGS: PREL MASS EAID PGOV PA
SUBJECT: BACHELET VISIT TO PARAGUAY


1. (SBU) SUMMARY: Chilean President Michelle Bachelet met
Paraguayan President Fernando Lugo July 22 before the July 24
MERCOSUR Summit in Asuncion. Bachelet reaffirmed to Lugo
Chile's desire to buy Paraguay's electricity, and the two
presidents signed a joint declaration to cooperate on social
programs. Bachelet spoke at a special session of Congress
where she voiced her concern about democracy in Latin
America, and announced that after July 26 Paraguay will enjoy
duty-free access to Chile's market. Accompanied by Lugo,
Bachelet visited a shantytown on the outskirts of Asuncion,
where Lugo for the first time expressed a clear preference
for the Chilean model for social development. Lugo scored a
public relations victory with Bachelet's visit, delivering a
clear signal about his intention to move Paraguay closer to
Chile. END SUMMARY.


2. (U) Chilean President Michelle Bachelet arrived in
Asuncion July 22 to meet with Paraguayan President Fernando
Lugo before the July 24 MERCOSUR Summit. Upon her arrival,
Bachelet stated her visit was intended to deepen cooperation
with Paraguay and advance a common agenda of modernization
and social progress. (NOTE: Bachelet did not make any
comments regarding the sexual scandal that forced the
resignation of Paraguay's designated Ambassador to Chile
Armando Espinola. END NOTE.)


3. (U) Lugo and Bachelet discussed the global financial
crisis, the influenza pandemic, Chile's desire to host the
2015 Americas Cup soccer tournament, and the situation in
Honduras. During their meeting, Bachelet reaffirmed to Lugo
Chile's desire to buy Paraguay's electricity. Bachelet also
reviewed Chile's ongoing cooperation efforts in the areas of
governability, education, public sector modernization,
security, and trade. The meeting ended with signing of a
joint declaration of cooperation on social programs, as well
as agreements with the Chilean Agency for International
Cooperation for assistance with housing development,
education, and police.


4. (U) Congress held a special session in honor of Bachelet
where legislators listened to her concerns about regional
developments. Bachelet admitted that democracy in Latin
America is not yet consolidated. She said Chile will work
through UNASUR and will not participate in the proposed
Bolivarian Armed Forces. She said governments could be
"popular without being populist." Bachelet announced that
after July 26, Paraguay will enjoy duty-free access to
Chile's market, as all levies and tariffs on Paraguayan goods
are eliminated.


5. (U) Accompanied by Lugo, Bachelet visited a shantytown on
the outskirts of Asuncion to launch a social program called
"Paraguay Solidario" -- a Paraguayan version of the Chilean
plan "Chile Solidario" which helped reduce poverty in Chile.
At the event, Lugo made clear for the first time his
preference for the Chilean model of social development.
Bachelet explained the program's social and economic
objectives, including aspects related to cash transfers and
food security for vulnerable families and children.


6. (SBU) COMMENT: In his recent visit to La Paz for Bolivia's
200th anniversary, Lugo quietly listened to rhetoric from
Chavez and Morales, causing many to worry that his silence
was acquiescence. However, upon his return to Asuncion, Lugo
clarified that Paraguay seeks greater integration with
MERCOSUR, and is not part of the Bolivarian project. Those
statements, coupled with Bachelet's visit, gave Lugo a solid
public relations victory with overwhelmingly positive press
coverage. For the first time, Lugo delivered a clear (and
welcome) signal about his intention to move Paraguay closer
to Chile. END COMMENT.
Fitzpatrick