US embassy cable - 05ASUNCION744

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