Identifier
Created
Classification
Origin
09ASUNCION532
2009-08-25 19:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Asuncion
Cable title:
CODEL GRANGER SCENESETTER
how-toVZCZCXYZ0000 OO RUEHWEB DE RUEHAC #0532/01 2371942 ZNR UUUUU ZZH O 251942Z AUG 09 FM AMEMBASSY ASUNCION TO RUEHC/SECSTATE WASHDC IMMEDIATE 8074 INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY RUEABND/DEA HQS WASHDC RHEHNCS/NSC WASHDC RUEAWJB/DEPT OF JUSTICE WASHDC RUEATRS/DEPT OF TREASURY WASHDC RHMFISS/HQ USSOUTHCOM MIAMI FL RUEKJCS/SECDEF WASHDC
UNCLAS ASUNCION 000532
SIPDIS
SENSITIVE
TO WHA/BSC MDASCHBACH, CCROFT, H JBULGRIN
E.O. 12958: N/A
TAGS: PGOV SNAR PREL OVIP PA
SUBJECT: CODEL GRANGER SCENESETTER
-------
SUMMARY
-------
UNCLAS ASUNCION 000532
SIPDIS
SENSITIVE
TO WHA/BSC MDASCHBACH, CCROFT, H JBULGRIN
E.O. 12958: N/A
TAGS: PGOV SNAR PREL OVIP PA
SUBJECT: CODEL GRANGER SCENESETTER
--------------
SUMMARY
--------------
1. (SBU) Embassy Asuncion warmly welcomes Codel Granger
September 2-5. Your visit follows President Fernando Lugo's
one-year anniversary in office, and will find the Lugo
government grappling with the challenges of day-to-day
governing. A corrupt judiciary and national police,
under-funded law enforcement institutions, and a large,
informal economic sector make Lugo's fight against corruption
difficult. Your visit offers the United States an
opportunity to reaffirm support for Paraguay's democratic
institutions, and in particular, its law enforcement
institutions. END SUMMARY.
--------------
LOCAL AND REGIONAL POLITICS
--------------
2. (SBU) Fernando Lugo's administration represents the first
interruption in Colorado Party rule in 61 years. By voting
overwhelmingly for change, the Paraguayan people gave former
Catholic bishop Lugo a mandate for political, economic, and
social reform. However, they also have high expectations.
Lugo took office on August 15, 2008 and just completed his
first year in office. He appears to be committed to reform,
but is discovering that real change is difficult to bring
about.
3. (SBU) Lugo is a leftist at heart, but a pragmatist of
mind. He maintains close relations with Venezuela, Bolivia,
and Ecuador, but also with the United States, Chile, Brazil,
Colombia and others. He said in late July that Paraguay's
"first circle" is MERCOSUR, and that Paraguay does not seek
to join the Bolivarian revolution. Lugo met with President
Bush in Washington in October 2008; he saw President Obama as
well as a congressional delegation led by Congressman Engel
at the Summit of the Americas in Trinidad and Tobago. Codel
Price (HDAC) visited Paraguay August 19-20.
4. (SBU) Lugo's challenges are many: His inexperienced team
must overcome endemic corruption in order to achieve its
goals of strengthening democratic institutions, promoting
economic growth, and brining about judicial, police, and land
reform. Lugo's Patriotic Alliance for Change (APC),a loose
coalition of political parties, won a large block of seats in
Congress but does not have a majority. The Liberal Party,
one of Paraguay's major political parties, waffles
back-and-forth in its support for Lugo, and Lugo has distant
(at best) relations with his Liberal Party Vice President,
Federico Franco.
Lugo's own inner circle continues to jockey for power and
ideological influence. So far, Lugo has weathered the storms
he has faced (including several paternity scandals),but he
has yet to develop a clear national agenda, or to engage in
the daily political brokering which will be critical to his
administration's success.
--------------
THE ECONOMIC REALITY
--------------
5. (U) Although Paraguay's macroeconomic indicators show the
country is reasonably positioned to face the financial
crisis, the economy is expected to contract at least three
percent this year, and will continue to shed jobs in the
process. Exports markedly slowed in the first half of 2009
as a result of lower prices and weaker external demand for
Paraguay's main export commodities (soy, grains, cattle).
Unemployment is over 20 percent, and with a population growth
rate above 2 percent per annum, the economy is not creating
enough jobs to meet demand. Paraguay boasts vast
hydroelectric resources, including the massive Itaipu
hydroelectric dam built and operated jointly with Brazil, but
fails to capitalize on those resources. The new government
purports to welcome foreign investment, but widespread
corruption and a weak judicial system are deterrents. There
is significant commercial activity involving the import of
goods from Asia and to a lesser extent the United States for
re-export to neighboring countries, mainly Brazil. The
underground economy, which is not included in the national
accounts, is probably twice the formal economy in size.
6. (U) Bilateral trade with the United States has increased
over the last six years. The U.S. imported from Paraguay
about USD 80 million in 2008, and exported over USD 1.6
billion, up from USD 1.2 million in 2007. Paraguay withdrew
its objection to U.S. trade preferences in the WTO last
March, thus opening the door for future trade discussions.
U.S. Representative Engel introduced trade preference
legislation (ATPA) in the U.S. Congress in April which would
give Paraguay increased access to U.S. markets, and a USTR
expert is visiting Paraguay the week of August 24 to help the
private sector take full advantage of existing GSP benefits.
More than a dozen U.S. multinational firms have subsidiaries
in Paraguay, and some 75 U.S. businesses have agents or
representatives in Paraguay. Cargill, ADM, Coca Cola, and
Exxon Mobile are the largest U.S. companies operating in
country. With over USD 650 million in private investment
stock, the U.S. is Paraguay's largest investor.
--------------
PUBLIC SECURITY ISSUES
--------------
7. (SBU) Security and social issues are top concerns of
Lugo's constituents. Violent crime is increasing in urban
and rural areas, and the public generally believes that
Paraguayan security forces (particularly the corrupt police)
do not meet their security needs. The "landless" farmer
movement -- active for many years in Paraguay -- has
organized protests and land invasions, calling for reform by
illegally occupying large, privately-held ranches. On some
occasions, protests and land invasions have resulted in
deaths or injuries.
8. (SBU) The Tri-Border Area (TBA) of Paraguay, Argentina and
Brazil is a hub for transnational criminal activity including
drug trafficking, trafficking in persons (TIP),arms
trafficking, intellectual piracy, and money laundering.
Paraguay is a major transshipment point for cocaine from
Colombia and Bolivia to Brazil; it is the top marijuana
producer in South America and the second largest in the
world. Paraguay remains a regional haven for money
laundering. Paraguayan authorities often experience
difficulties enforcing the law because of hostile geography,
corruption, chronic understaffing, and the political and
judicial power some drug traffickers wield. Paraguay took a
giant step forward on money laundering, intellectual property
violations, and trafficking in persons by passing a tougher
penal code that went into effect in July.
9. (SBU) Paraguay's Anti-Narcotics Secretariat (SENAD) is a
strong partner on counternarcotics. DEA works closely with
SENAD's Sensitive Investigative Unit (SIU). DEA's efforts
intensified this year via an increased presence in country.
State's International Narcotics and Law Enforcement (INL)
program, although modest, multiplies DEA's efforts in country
(USD 253,000 in FY2009; USD 500,000 requested for FY2010). In
addition to counternarcotics, the INL program also supports
other Paraguayan institutions in combating narcotics
trafficking, money laundering, IPR violations, and
trafficking in persons.
--------------
OTHER U.S. ASSISTANCE TO PARAGUAY
--------------
10. (U) U.S. assistance in Paraguay in consistent with many
of Lugo's goals. The centerpiece of our assistance is Phase
Two of the Millennium Challenge Corporation's Threshold
Program, which the Paraguayan Congress approved July 31. The
Threshold Program, worth USD 30 million, focuses on
anti-corruption. USAID/Paraguay's FY09 budget is USD 17.15
million and focuses on Economic Growth; Health Care;
Sustainable Management of Natural Resources and Protected
Areas; and Democratic Strengthening. USG support for the
Paraguay Military Forces is limited but robust. One
highlight is the U.S. Armed Forces' USD 4.1 million donation
of Global Peace Operations Initiative (GPOI) funds and
technical assistance to Paraguay's United Nations Global
Peace Keeping Operations Program (UNPKO).
--------------
COMMENT
--------------
11. (SBU) Your visit offers the United States an opportunity
to reaffirm support for Paraguay's democratic institutions,
and in particular, its counternarcotics and law enforcement
agencies. Lugo has stated that he seeks to strengthen
democratic institutions. We hope his administration's first
budget (which is being finalized now) will invest additional
resources into Paraguay's law enforcement institutions, so
Paraguay can continue to build upon U.S. support in these
areas. END COMMENT.
Ayalde
SIPDIS
SENSITIVE
TO WHA/BSC MDASCHBACH, CCROFT, H JBULGRIN
E.O. 12958: N/A
TAGS: PGOV SNAR PREL OVIP PA
SUBJECT: CODEL GRANGER SCENESETTER
--------------
SUMMARY
--------------
1. (SBU) Embassy Asuncion warmly welcomes Codel Granger
September 2-5. Your visit follows President Fernando Lugo's
one-year anniversary in office, and will find the Lugo
government grappling with the challenges of day-to-day
governing. A corrupt judiciary and national police,
under-funded law enforcement institutions, and a large,
informal economic sector make Lugo's fight against corruption
difficult. Your visit offers the United States an
opportunity to reaffirm support for Paraguay's democratic
institutions, and in particular, its law enforcement
institutions. END SUMMARY.
--------------
LOCAL AND REGIONAL POLITICS
--------------
2. (SBU) Fernando Lugo's administration represents the first
interruption in Colorado Party rule in 61 years. By voting
overwhelmingly for change, the Paraguayan people gave former
Catholic bishop Lugo a mandate for political, economic, and
social reform. However, they also have high expectations.
Lugo took office on August 15, 2008 and just completed his
first year in office. He appears to be committed to reform,
but is discovering that real change is difficult to bring
about.
3. (SBU) Lugo is a leftist at heart, but a pragmatist of
mind. He maintains close relations with Venezuela, Bolivia,
and Ecuador, but also with the United States, Chile, Brazil,
Colombia and others. He said in late July that Paraguay's
"first circle" is MERCOSUR, and that Paraguay does not seek
to join the Bolivarian revolution. Lugo met with President
Bush in Washington in October 2008; he saw President Obama as
well as a congressional delegation led by Congressman Engel
at the Summit of the Americas in Trinidad and Tobago. Codel
Price (HDAC) visited Paraguay August 19-20.
4. (SBU) Lugo's challenges are many: His inexperienced team
must overcome endemic corruption in order to achieve its
goals of strengthening democratic institutions, promoting
economic growth, and brining about judicial, police, and land
reform. Lugo's Patriotic Alliance for Change (APC),a loose
coalition of political parties, won a large block of seats in
Congress but does not have a majority. The Liberal Party,
one of Paraguay's major political parties, waffles
back-and-forth in its support for Lugo, and Lugo has distant
(at best) relations with his Liberal Party Vice President,
Federico Franco.
Lugo's own inner circle continues to jockey for power and
ideological influence. So far, Lugo has weathered the storms
he has faced (including several paternity scandals),but he
has yet to develop a clear national agenda, or to engage in
the daily political brokering which will be critical to his
administration's success.
--------------
THE ECONOMIC REALITY
--------------
5. (U) Although Paraguay's macroeconomic indicators show the
country is reasonably positioned to face the financial
crisis, the economy is expected to contract at least three
percent this year, and will continue to shed jobs in the
process. Exports markedly slowed in the first half of 2009
as a result of lower prices and weaker external demand for
Paraguay's main export commodities (soy, grains, cattle).
Unemployment is over 20 percent, and with a population growth
rate above 2 percent per annum, the economy is not creating
enough jobs to meet demand. Paraguay boasts vast
hydroelectric resources, including the massive Itaipu
hydroelectric dam built and operated jointly with Brazil, but
fails to capitalize on those resources. The new government
purports to welcome foreign investment, but widespread
corruption and a weak judicial system are deterrents. There
is significant commercial activity involving the import of
goods from Asia and to a lesser extent the United States for
re-export to neighboring countries, mainly Brazil. The
underground economy, which is not included in the national
accounts, is probably twice the formal economy in size.
6. (U) Bilateral trade with the United States has increased
over the last six years. The U.S. imported from Paraguay
about USD 80 million in 2008, and exported over USD 1.6
billion, up from USD 1.2 million in 2007. Paraguay withdrew
its objection to U.S. trade preferences in the WTO last
March, thus opening the door for future trade discussions.
U.S. Representative Engel introduced trade preference
legislation (ATPA) in the U.S. Congress in April which would
give Paraguay increased access to U.S. markets, and a USTR
expert is visiting Paraguay the week of August 24 to help the
private sector take full advantage of existing GSP benefits.
More than a dozen U.S. multinational firms have subsidiaries
in Paraguay, and some 75 U.S. businesses have agents or
representatives in Paraguay. Cargill, ADM, Coca Cola, and
Exxon Mobile are the largest U.S. companies operating in
country. With over USD 650 million in private investment
stock, the U.S. is Paraguay's largest investor.
--------------
PUBLIC SECURITY ISSUES
--------------
7. (SBU) Security and social issues are top concerns of
Lugo's constituents. Violent crime is increasing in urban
and rural areas, and the public generally believes that
Paraguayan security forces (particularly the corrupt police)
do not meet their security needs. The "landless" farmer
movement -- active for many years in Paraguay -- has
organized protests and land invasions, calling for reform by
illegally occupying large, privately-held ranches. On some
occasions, protests and land invasions have resulted in
deaths or injuries.
8. (SBU) The Tri-Border Area (TBA) of Paraguay, Argentina and
Brazil is a hub for transnational criminal activity including
drug trafficking, trafficking in persons (TIP),arms
trafficking, intellectual piracy, and money laundering.
Paraguay is a major transshipment point for cocaine from
Colombia and Bolivia to Brazil; it is the top marijuana
producer in South America and the second largest in the
world. Paraguay remains a regional haven for money
laundering. Paraguayan authorities often experience
difficulties enforcing the law because of hostile geography,
corruption, chronic understaffing, and the political and
judicial power some drug traffickers wield. Paraguay took a
giant step forward on money laundering, intellectual property
violations, and trafficking in persons by passing a tougher
penal code that went into effect in July.
9. (SBU) Paraguay's Anti-Narcotics Secretariat (SENAD) is a
strong partner on counternarcotics. DEA works closely with
SENAD's Sensitive Investigative Unit (SIU). DEA's efforts
intensified this year via an increased presence in country.
State's International Narcotics and Law Enforcement (INL)
program, although modest, multiplies DEA's efforts in country
(USD 253,000 in FY2009; USD 500,000 requested for FY2010). In
addition to counternarcotics, the INL program also supports
other Paraguayan institutions in combating narcotics
trafficking, money laundering, IPR violations, and
trafficking in persons.
--------------
OTHER U.S. ASSISTANCE TO PARAGUAY
--------------
10. (U) U.S. assistance in Paraguay in consistent with many
of Lugo's goals. The centerpiece of our assistance is Phase
Two of the Millennium Challenge Corporation's Threshold
Program, which the Paraguayan Congress approved July 31. The
Threshold Program, worth USD 30 million, focuses on
anti-corruption. USAID/Paraguay's FY09 budget is USD 17.15
million and focuses on Economic Growth; Health Care;
Sustainable Management of Natural Resources and Protected
Areas; and Democratic Strengthening. USG support for the
Paraguay Military Forces is limited but robust. One
highlight is the U.S. Armed Forces' USD 4.1 million donation
of Global Peace Operations Initiative (GPOI) funds and
technical assistance to Paraguay's United Nations Global
Peace Keeping Operations Program (UNPKO).
--------------
COMMENT
--------------
11. (SBU) Your visit offers the United States an opportunity
to reaffirm support for Paraguay's democratic institutions,
and in particular, its counternarcotics and law enforcement
agencies. Lugo has stated that he seeks to strengthen
democratic institutions. We hope his administration's first
budget (which is being finalized now) will invest additional
resources into Paraguay's law enforcement institutions, so
Paraguay can continue to build upon U.S. support in these
areas. END COMMENT.
Ayalde