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Cablegate: Paraguay Political and Economic Update, May

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ASUNCION 000744

SIPDIS

STATE FOR WHA/BSC AND EB/IFD/OIA
STATE PASS TO USAID FOR LAC/AA
STATE PASS TO USTR FOR SCRONIN AND LYANG
NSC FOR KIM BREIER
TREASURY FOR OSIA MAUREEN WAFER
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR
COMMERCE FOR ITA SARAH COOK
SOUTHCOM FOR POLAD DAN JOHNSON

E.O. 12958: N/A
TAGS: PGOV PREL KCRM OTRA KSAC CA PA
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, MAY
28-JUNE 3


1. (U) Summary
----------------
-- Security developments
-- Congress calls for parity in Mercosur Parliament
-- New cabinet shuffles

Security developments
---------------------
2. The press reported widely on Vice President Luis
Castiglioni,s visit to Washington, focusing on efforts to
expand security cooperation between the two countries. The
press flagged U.S support for creation of a Trade
Transparency Module in the Customs Department; U.S.-Paraguay
joint military exercises; and a workshop sponsored by the
Center for Hemispheric Defense Studies (CHDS) as deliverables
flowing from the visit. The coverage has been generally
factual and positive. We will be meeting with the Vice
President upon his return to discuss next steps, particularly
with regard to preparing for DS/ATA and CHDS assessments and
getting the Congress to move on money laundering legislation.

3. Ministers of Interior of the Mercosur member countries,
Argentina, Brazil, Uruguay, and Paraguay, and the associate
members, Chile, Peru, Ecuador, and Colombia convened on June
3 to address issues of international security and methods to
improve communication among countries in the region. The
Ministers signed two cooperation agreements to prevent and
control kidnapping and to fight the trafficking of minors.

4. In a meeting with the Ambassador on June 1, Canadian
Ambassador Yves Gagnon announced that his government is
preparing a new budget, the Global Peace and Security Fund,
with USD 100 million for security and anti-transnational
crime assistance programs worldwide. Ambassador Gagnon
conveyed his government's desire to assist Paraguay in areas
that the U.S. government is currently providing support, i.e.
money laundering, counterterrorism, intellectual property
rights, trafficking in persons, counterdrug, and arms
smuggling. We will be coordinating with the Canadian embassy
in Buenos Aires on this.


Congress calls for parity in Mercosur Parliament
--------------------------------------------- ---
5. On June 1, Paraguay,s Chamber of Deputies approved a
declaration supporting parity for the Mercosur countries to
comprise the future Mercosur Parliament; in accordance with
the pronouncement made by Paraguay,s Senate on May 31, the
Chamber of Deputies called for each country in Mercosur to be
afforded the same number of representatives. Paraguay's
proposal does not square with the initial consensus reached
by the Mercosur countries at a technical level for the
creation of a parliament which would allow for 36 legislators
for Brazil, 31 for Argentina, and 16 each for Paraguay and
Uruguay. During the Mercosur Joint Parliamentary Commission
meeting on June 3, the Brazilian negotiators rejected the
Paraguayan proposal. The protocol's final approval could be
delayed as without a preliminary accord the Mercosur
presidents will have no agreement to validate during the
upcoming Mercosur summit later this month.

New cabinet shuffles
--------------------
6. Dr. Jose Maria Ibanez, private secretary to President
Duarte, was named political and international affairs advisor
to Duarte, a move that positions him to succeed Leila Rachid
as Foreign Minister. The press has reported Rachid will be
named Paraguay's Ambassador to the United Nations, replacing
Eladio Loizaga. Julio Peralta, the MFA's Director of
International Organizations, confirmed this decision was
under consideration but had not been taken yet. Carlos Maria
Santacruz, a Congressman in the Lower House of Paraguay's
Congress, has been named the new presidential private
secretary.

SIPDIS

7. (U) Meanwhile, Ibanez' father, Minister of Agriculture
Dr. Antonio Ibanez, under investigation for accusations
reported in the press that he owned and benefited from a meat
supply business that acted as an illegal purveyor to the
Paraguayan National Police, resigned from the cabinet on June
5. Ibanez maintained that he resigned to demonstrate his
"innocence" and to pave the way for his son's appointment as
Foreign Minister. Local media report that prosecutors raided
a house from where the meat supply business operated, seizing
documents that link former Minister Ibanez to the business.
No charges have as yet been filed.

8. (U) Comment: Pundits speculate that the sudden media
frenzy over Ibanez senior,s beef scandal, which has been on
the back burner for 18 months, is prompted by efforts to
torpedo his son,s prospects to become foreign minister. The
junior Ibanez is not well-liked in some circles, particularly
of the Colorado Party, because he has been a tough
gate-keeper for President Duarte Frutos. End Comment.
KEANE

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