US embassy cable - 05ASUNCION412

UNCLAS SECTION 01 OF 02 ASUNCION 000412 
 
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, ECON, PINR, SNAR, KCRM, PA 
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, MARCH 19-23 
 
REF: A. ASUNCION 385 
     B. ASUNCION 226 
     C. ASUNCION 179 
 
1. SUMMARY: 
 
-- Colorado Deputy Colman Stripped of Immunity; Will Face 
Investigation 
-- GOP Sells Brazilian Trafficker's Seized Assets 
-- Crockett and Tubbs in Ciudad del Este? 
-- Continued Crack Down in TBA Affects Local Economy 
 
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Colorado Deputy Colman Stripped of Immunity; Will Face 
Investigation 
--------------------------------------------- --------------- 
 
2.  On March 22, almost unanimously the Chamber of Deputies 
voted in favor of stripping Congressional immunity from 
Colorado Deputy Julio Colman, who was embroiled in a scandal 
in early February involving a suspect load of timber and 
threats to a prosecutor (refs A and B), allowing prosecutors 
to investigate and possibly prosecute Colman for his 
misconduct.  Earlier that day, President Duarte caused a last 
minute scramble among key Colorado legislators, set to back 
Colman, by announcing that he would support lifting Colman's 
immunity, a change from his previous statements of support 
for the Colorado Deputy. The about face by the President and 
Colorado legislators came under intense public pressure to 
take action in this case of very public abuse of authority 
and scandalous behavior. 
 
--------------------------------------------- - 
GOP Sells Brazilian Trafficker's Seized Assets 
--------------------------------------------- - 
 
3.  Seized assets from arrested Brazilian drug trafficker 
Claudair Lopes de Faria were sold yesterday in a public 
auction in which his home furnishings, real estate, and an 
airplane grossed 1.1 billion Guaranis (USD 171,000).  The 
revenue will fund programs in the Supreme Court, the National 
Counterdrug Secretariat (SENAD), the Prosecutor's office, and 
several non-profit organizations.  Paraguayan authorities 
arrested Lopes de Faria in June 2003 and expelled him to 
Brazil where he was sentenced to 480 years in prison for 
narcotics trafficking, according to press. 
 
-------------------------------------- 
Crockett and Tubbs in Ciudad del Este? 
-------------------------------------- 
 
4.  Director Michael Mann (creator of the TV series) and 
Producer Jan Pieter Brugge, currently working on the big 
screen version of "Miami Vice," made headlines across 
Paraguay this week.  Mann and his team are contemplating 
filming part of the movie in Ciudad del Este.  They met with 
the Ambassador, Ciudad del Este officials, and GOP leaders 
such as Presidential Economic Advisor Walde and Minister of 
Tourism Evanhy Gallegos.  While most media and officials met 
the prospect of a Universal Studios production being filmed 
in Paraguay with enthusiasm, the Ciudad del Este 
correspondent for leading daily "ABC Color" originally 
painted the movie as bad for the city's image, since it might 
link the city to terrorism.  Mann and his team countered the 
bad press head-on with a major interview in the same daily, 
with a correspondent recommended by PAS Asuncion, in which 
the full benefit to Paraguay was explained and the allegation 
that the movie dealt with terrorism in Ciudad del Este 
forcefully dispelled. The article even went so far as to 
apologize for the misinformation printed earlier. 
 
--------------------------------------------- ---- 
Continued Crack Down in TBA Affects Local Economy 
--------------------------------------------- ---- 
 
5.  Increased customs and immigrations enforcement on the 
Friendship Bridge, connecting Ciudad del Este and Foz Do 
Iguacu, Brazil to target piracy and contraband (ref C) has 
greatly affected the local economy in Ciudad del Este. 
Javier Zacarias Irun, Ciudad del Este mayor, told the press 
that Paraguay's losses from the imposed restrictions amounts 
to USD 11 million and Paraguayan Customs Director Margarita 
Diaz Vivar revealed to the press that Brazil's control 
measures are also affecting Paraguay's ability to collect tax 
revenue in the region.  Local shop owners in Ciudad del Este 
have threatened massive layoffs of illegally employed 
Brazilian nationals in reaction to the enforcement efforts. 
 
6.  Separately, Brazilian Political Counselor and Customs 
Attach told PolOffs in a meeting on March 22 that the 
crackdown on IPR violations and smuggling was a permanent 
government-wide policy, not a month-long exercise like that 
conducted in previous years over the December holiday season. 
 They pointed out though, that the Friendship Bridge is not 
their highest priority as smuggling problems are worse along 
the "dry" borders in Pedro Juan Caballero and Salto de 
Guaira.  The Brazilians also noted to PolOffs that there was 
a certain momentum to increase the customs exemption for 
Brazilian citizens returning from shopping excursions in 
Ciudad del Este from the present US$150, but said that it was 
not likely to go as high as the US$500 that many are seeking. 
 In addition, the Brazilians mentioned that this exemption 
would only apply to items for personal use, not to commercial 
imports.  Brazilian Ambassador told Ambassador Keane on March 
23 that a Paraguayan-Brazilian working group would meet on 
March 31 to discuss ways to ameliorate the negative effects; 
he stressed however, that the crackdown on smuggling and 
other crimes in TBA would be sustained and increase. 
KEANE