US embassy cable - 05ASUNCION589

UNCLAS SECTION 01 OF 02 ASUNCION 000589 
 
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, PINR, PTER, ECON, KCRM, PA 
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, APRIL 23-29 
 
REF: A. ASUNCION 00557 
 
     B. ASUNCION 00512 
 
1. (U) Summary 
-------------- 
-- Senate votes to reactivate privatization law 
-- AG intervenes in probe of Health Minister's prior conduct 
-- Unconfirmed reports of FARC activity in Paraguay 
-- U.S. cardiology team praised for its charity 
-- Paraguay mourns the death of writer Roa Bastos 
 
Senate votes to reactivate privatization law 
-------------------------------------------- 
2. On April 21, the Senate voted to repeal a 2002 law that 
froze the privatization process.  The repeal was a Senate 
initiative and a bit of a surprise, even to the executive 
branch, although the repeal still needs to be blessed by the 
Chamber of Deputies.  The eventual form of "capitalization" 
(privatization is a bad word in Paraguay) remains to be seen, 
and the motives behind the Senate action are unclear, but 
reform of the many state-owned enterprises is badly needed. 
A few international audits have been completed, and several 
more are in the process of being awarded.  Perhaps 
coincidentally this week, the Paraguayan representative to 
the binational entity that controls the Yacyreta dam was 
suddenly replaced by Petropar's chief, who was in turn 
replaced by the Planning Director of the state-owned 
electricity company, ANDE.  More to come when we learn more 
about the various machinations behind these moves. 
 
AG intervenes in probe of Health Minister's prior conduct 
--------------------------------------------- ------------ 
3. Following President Duarte's public show of support last 
week for Health Minister Julio Cesar Velazquez, who faces an 
inquiry into his administration of funds and projects as the 
former Mayor of Fernando de la Mora (reftels), this week the 
Attorney General's Office intervened in the matter, shelving 
several of the complaints lodged against Velazquez. 
According to press reports, several of the complaints were 
pending further investigation and remain unresolved.  (Note: 
As noted in ref A, Velazquez is one of several Colorados 
vying to become President of the Colorado party in upcoming 
internal elections.  He is also head of a committee exploring 
the possibility of a Constitutional reform that would permit 
the President of the country to run for re-election.  End 
Note.) 
 
Unconfirmed reports of FARC activity in Paraguay 
--------------------------------------------- --- 
4. Various unconfirmed reports of FARC activity in Paraguay 
emerged in the local press this week.  According to one 
report, the Attorney General's Office is investigating the 
possibility that six FARC members entered Paraguay last year 
by way of Bolivia to assist with the kidnapping of former 
President Raul Cubas' daughter, Cecilia Cubas.  The report 
also indicates that authorities received evidence that the 
Paraguayan "mastermind" behind the kidnapping, Osmar 
Martinez, was in email contact with FARC leader Raul Reyes 
and FARC members residing in Argentina, in addition to his 
known contacts with FARC "FM" Rodrigo Granda.  According to a 
separate report, police in Ciudad del Este thwarted an 
attempt to kidnap a relative of "a well-known physician" by a 
group that purportedly included a Colombian national "who 
could be a member of the FARC."  Post will report any 
confirmation of these reports and additional details, as they 
emerge, via septel. 
 
U.S. cardiology team praised for its charity 
-------------------------------------------- 
5. A team of cardiologists from a children's hospital in 
Connecticut traveled to Paraguay this week to perform 
life-saving surgical procedures on 10 indigent children.  The 
visit received abundant praise in the local press. 
 
Paraguay mourns the death of writer Roa Bastos 
--------------------------------------------- - 
6. Novelist Augusto Roa Bastos, a 1989 winner of the 
Cervantes Prize for Literature in Spanish and arguably 
Paraguay's greatest author, died on April 26 at the age of 
87.  Roa Bastos's works often reflected the region's 
political and social realities, which led to his decades-long 
exile, first from Paraguay under the dictatorship, and then 
from Argentina after a military junta seized power.  He 
remained a literary hero in Paraguay throughout his life, and 
the country observed three days of official mourning upon his 
death. 
KEANE