Cablegate: Paraguay Political and Economic Update, July 22 -

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DE RUEHAC #0768/01 2091515
ZNR UUUUU ZZH
R 281515Z JUL 06
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC 4588
INFO RUCNMER/MERCOSUR COLLECTIVE
RHEHNSC/WHITE HOUSE NSC WASHDC
RUMIAAA/USCINCSO MIAMI FL//SCJ5//
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC

UNCLAS ASUNCION 000768

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/IFD/OIA AND INL - ABBY SMITH
STATE PASS TO USAID FOR LAC/AA
STATE PASS TO USTR FOR LYANG
NSC FOR SUE CRONIN
TREASURY FOR OSIA MAUREEN WAFER
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR
COMMERCE FOR ITA SARAH COOK
SQTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: PGOV PHUM PREL SMIG KCRM PA SP BO
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 22 -
28 2006

REF: A. ASUNCION 00748
B. ASUNCION 00749 AND PRECEDING

1. (U) SUMMARY:
-- Growing Protests in CDE
-- Couple Accused of Trafficking Children to Spain
-- IMF Director Compliments Paraguay's Performance

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Growing Protests in CDE
-----------------------

2. (SBU) On 7/21, Embassy sources reported that approximately
600 protesters marched peacefully in Ciudad del Este in a
demonstration against the Israeli strikes in Lebanon and the
foreign policy of President Bush. The protesters included
members of the National Coordinating Movement of Farmer
Organizations (MCNOC), the group "Literacy for Adults, Faith
and Happiness of Concepcion, Chore, and San Pedro of Ykua
Mandyju" and members of the Lebanese communities of CDE, Foz
de Iguazu (Brazil), Uruguay, Argentina and other countries.

3. (U) On 7/24, local press reported that approximately 3,000
protesters participated in the Second Social FQm of the
Tri-Border Area (TBA). A series of demonstrations that began
Friday, 7/21 and ended Sunday, 7/23, intended to show support
for the Lebanese and Palestinian people. Other themes
included protest of a purported construction of a military
base in the TBA, the renewal of US military exercises in
Paraguay, and debt associated with Itaipu Binacional and
Yacyreta. They also addressed issues such as the agrarian
crisis in Paraguay, the crisis in the universities,
"Operation Condor in the TBA", and terrorism of the state.
Protesters included people from more than ten Latin American
countries, including: Paraguay, Brazil, Argentina, Chile,
Uruguay, Venezuela, Bolivia, Cuba, Peru, Ecuador and Mexico.
(Comment: While TBAprotests over the Middle East crisis have
been peaceful thus far, the Asuncion Jewish community is
concerned for its safety and has increased security (Ref. A).
RSO and Post continue to monitor the situation. End Comment.)

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Couple Accused of Trafficking Children to Spain
--------------------------------------------- --

4. (U) On 7/27, Claudia Lorena Martinez and Andres Eligio
Ponce, both of Spanish descent, were detained for trafficking
children to Spain and possibly selling internal organs as
well. Martinez and Ponce were previously involved in a case
of falsified passports, which resulted in a warrant for
Ponce's arrest in 2005. Ponce was in prison in Tacumbu, but
has since been moved to the prison in Emboscada. Since the
mothers of both Martinez and Ponce are Spanish, the couple
did not have trouble entering Spain with the children, whom
they took to Spain to be adopted for a price of USD 6,000 to
10,000 per child. Prosecutor Cristina Avalon recovered
public health and civil registry documents which indicated
that the biological mother of the girls who were rescued is
Claudia Martinez herself, although two different names of a
biological father appeared on different copies of the
documents. The investigation is ongoing to determine whether
the couple was involved in the trafficking of organs as well.

--------------------------------------------- --
IMF Director Compliments Paraguay's Performance
--------------------------------------------- --

5. (U) An IMF staff mission is in Paraguay to begin the first
review of Paraguay,s new IMF program. According to press
reports, Mission Chief Alejandro Santos indicated that while
time is needed for more precise conclusions and exact
figures, he said that the GOP appears to be on track to meet
the program,s near-term targets. Santos commented favorable
on the Central Bank,s ability to rein in inflation in the
second quarter. IMF staff and the Finance Ministry are now

looking to identify problem areas and develop compensation
plans for the rest of the year. Vice Minister Jorge von
Horoch emphasized the importance of public investment and the
need to differentiate between quality and quantity of
expenses. Program goals for 2006 include an inflation rate
between 2.5 percent and 7.5 percent, a balanced budget, and
public investments accounting for 4.5 percent of GDP.
Details of plans for private sector participation in
State-owned enterprises remain to be developed.
CASON

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