US embassy cable - 05ASUNCION670

UNCLAS SECTION 01 OF 02 ASUNCION 000670 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS TO USAID (LAC/AA) 
SOUTHCOM FOR POLAD DAN JOHNSON 
NSC FOR KIM BREIER 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, PINR, PA 
SUBJECT: PARAGUAY: DUARTE SHAKES UP CABINET AS POLLS SHOW 
DECLINING SUPPORT FOR HIS ADMINISTRATION 
 
REF: A. ASUNCION 00627 AND PRECEDING 
     B. ASUNCION 00589 AND PRECEDING 
 
1. (U) Summary: On May 14, President Nicanor Duarte Frutos 
sacked Health Minister Julio Cesar Velazquez, who in recent 
months has been campaigning to become Colorado (ANR) party 
president.  Duarte appointed someone with a more technical -- 
i.e., less political -- background to replace him.  Duarte 
reportedly also asked Minister of Labor and Justice Juan 
Dario Monges and Minister of Defense Roberto Gonzalez to 
resign so that they could dedicate themselves to their 
respective campaigns for the ANR presidency.  Monges will 
likely step down soon.  Gonzalez apparently chose instead to 
give up or delay aspirations to preside over the party.  The 
ouster of Velazquez and likely ouster of Monges come on the 
heels of several polls showing declining support for the 
Duarte administration.  In a surprise, unrelated development, 
Minister of Finance Dionisio Borda resigned May 19 (septel to 
follow).  Foreign Minister Leila Rachid will also leave this 
summer.  End Summary. 
 
Health Minister Sacked 
---------------------- 
2. (U) On May 14, President Nicanor Duarte Frutos sacked 
Health Minister Julio Cesar Velazquez.  His removal followed 
a controversy over an inquiry into his administration of 
funds and projects as the former Mayor of Fernando de la Mora 
(ref B), complaints about his performance as Health Minister, 
and complaints that his recent focus on party politics 
distracted him from running the Ministry.  (Note: In recent 
months, Velazquez has been campaigning to become ANR party 
president.  He also served as the head of a committee 
exploring the possibility of a Constitutional reform that 
would permit the President of Paraguay to run for re-election 
(refs A and B).  End Note.) 
 
3. (U) Commentators suggest that Velazquez "was pushed after 
he refused to jump."  Velazquez's own assertions that he 
turned down other positions that Duarte offered him support 
such an assessment.  Duarte offered faint praise for 
Velazquez's performance as Health Minister, and cited a need 
for someone "more technical, less political" as the reason 
for his decision to replace him. 
 
4. (SBU) Comment: Velazquez's removal puts into play the 
votes and support of his strong ANR following in the populous 
Central Department.  Despite leading the on-again, off-again 
bid for a Constitutional reform that would enable Duarte to 
seek a second term, Velazquez would like to succeed Duarte as 
ANR candidate for President should such a bid fail.  Many 
commentators assert that Duarte removed Velazquez because he 
posed too much of threat to Duarte's leadership, rather than 
for his performance in office.  Velazquez will likely attempt 
to forge an alliance to challenge Duarte in the ANR's 
upcoming internal elections.  Commentators suggest that such 
an alliance might include backers of Goli Stroessner, 
grandson of former dictator Alfredo Stroessner.  The younger 
Stroessner recently revealed his own political aspirations, 
to the dismay of many in Paraguay, but with a name still 
revered by others.  End Comment. 
 
Technocrat Appointed to Take Over Ministry 
------------------------------------------ 
5. (U) Duarte appointed Maria Teresa Leon Mendaro to replace 
Velazquez.  Leon is a 54-year-old pathologist and professor 
who moved up through the Health Ministry ranks from director 
of a dispensary in Caacupe to head of the Ministry's 
epidemiology department.  She is credited with spearheading a 
successful campaign to combat dengue fever, and served as one 
of Velazquez's technical advisers. 
 
6. (U) Upon accepting her new appointment, Leon pledged to 
improve services in the Ministry's hospitals and the 
effectiveness of its staff, and signaled her desire to 
enhance cooperation among practitioners working in the 
country's various health care institutions.  Delivering on a 
pledge to de-politicize the Ministry's key staff, she 
immediately reinstated technical experts to senior leadership 
positions that Velazquez had filled with political allies. 
 
7. (SBU) Comment: The Ambassador and USAID Mission Director 
will call on Leon as soon as possible to discuss issues such 
as a proposed World Bank loan for the Ministry, the new 
Minister's reported plans to focus on reproductive health 
care, and a program started under a previous Minister to 
decentralize the Ministry's budget process.  The 
decentralization program permitted some health care 
institutions to collect fees for services and empowered local 
authorities to determine how best to utilize the fees 
collected.  Post will report on the meeting septel.  End 
Comment. 
 
Two Other Ministers Asked to Resign 
----------------------------------- 
8. (SBU) Duarte reportedly also asked Minister of Labor and 
Justice Juan Dario Monges and Minister of Defense Roberto 
Gonzalez to resign.  They, too, have been campaigning for the 
ANR party presidency over the past few months.  Monges told 
the press that he would step down "before the end of the 
year," but there is intense speculation that he will depart 
as early as the end of this week.  Press reports indicate 
that Duarte has selected ANR Deputy Mario Morel Pintos to 
succeed Monges, and that Morel will be sworn in May 20. 
(Comment: Not surprisingly, Morel also hails from Central 
Department.  Appointing him to replace Monges could mitigate 
the negative impact for Duarte of removing Velazquez.  End 
Comment.)  Gonzalez, on the other hand, apparently chose to 
give up or delay his aspirations to preside over the party 
and will remain at the Ministry of Defense for the 
foreseeable future. 
 
Polls Show Declining Support for Administration 
--------------------------------------------- -- 
9. (U) The ouster of Velazquez and likely ouster of Monges 
come on the heels of several polls showing declining support 
for the Duarte administration.  An April 2005 COIN 
Consultancy poll showed that Duarte's approval rating (i.e., 
the number of respondents who rated his performance in office 
as "good" or "excellent") had fallen to 13.6 percent, down 
from 22.9 percent in April 2004, and down from the 37 percent 
of the popular vote Duarte received in the April 2003 
presidential election.  Duarte's disapproval rating (i.e., 
the number of respondents who rated his performance as "bad" 
or "very bad") rose from 35 percent in April 2004 to 40.6 
percent in April 2005.  According to the COIN organization, 
respondents in the April 2005 poll still believe Duarte has 
good intentions, but they are increasingly frustrated by the 
lack of concrete measures to address unemployment, corruption 
and public safety. 
 
10. (SBU) A separate April 2005 poll, conducted by a company 
called First, gauged opinions towards the members of Duarte's 
cabinet.  Of the three Ministers who were asked to resign, 
Velazquez actually received the highest approval rating (35.3 
percent) and Gonzalez the lowest (21.4 percent).  Gonzalez 
was also dead last among the ten Ministers rated in the poll, 
whereas Velazquez was fourth overall.  (Comment: The results 
of the First poll support the assertion that Duarte removed 
Velazquez because he posed a threat to Duarte's leadership, 
rather than for his performance in office.  Gonzalez, on the 
other hand, may be hanging on because he is a personal friend 
of the President.  Some suggest that his position also would 
be more difficult to fill than Velazquez's.  End Comment.) 
 
Other Departures 
---------------- 
11. (U) In a surprise move May 19, Minister of Finance 
Dionisio Borda announced his resignation (see septel). 
Foreign Minister Leila Rachid will also leave this summer, as 
has been expected. 
KEANE