US embassy cable - 05ASUNCION939

C O N F I D E N T I A L SECTION 01 OF 03 ASUNCION 000939 
 
SIPDIS 
 
STATE PASS TO USAID FOR LAC/AA 
NSC FOR SUE CRONIN 
SOUTHCOM FOR POLAD DAN JOHNSON 
 
E.O. 12958: DECL: 07/25/2015 
TAGS: PGOV, PREL, PINR, EAID, MARR, KDEM, KWMN, PA 
SUBJECT: PARAGUAY: AMBASSADOR CALLS ON NEW SENATE 
LEADERSHIP, AG OPINES ON POLITICAL SCENE 
 
Classified By: PolOff Mark A. Stamilio, reasons 1.4(b) and (d). 
 
Summary 
------- 
1. (U) On 7/22, the Ambassador called on the new Senate 
President, Carlos Filizzola, and discussed the pending 
Millennium Challenge Corporation (MCC) project aimed at 
improving transparency and legislative effectiveness; 
legislation to increase citizen participation in government; 
military exercises scheduled for the next 18 months; the 
termination of USAID's reproductive health program; and 
Filizzola's priorities for this year's legislative agenda. 
 
2. (C) The Ambassador also called on the new First Vice 
President of the Senate, Alejandro Velazquez, and the new 
President of the Senate Foreign Relations Committee, Adriana 
Franco.  Velazquez complained at length about the 
deterioration of relations between the majority multi-party 
bloc in Congress and the opposition.  Franco asked how to 
increase openness and cooperation with the USG.  The 
Ambassador responded that cooperation was very good in areas 
such as counter-narcotics, anti-corruption and 
counter-terrorism, but that Paraguay needed to improve its 
performance with respect to enforcing the law, especially on 
money laundering, and needed to improve its business climate. 
 Both Velazquez and Franco complained that imprisoned UNACE 
leader Lino Oviedo was seeking to punish them for working 
with the Colorados by calling in large alleged debts. 
 
3. (C) Attorney General Oscar Latorre shared with the 
Ambassador later that same day his concern that the country's 
political leadership has embarked on a perilous road toward 
sterile confrontation.  Latorre was also disdainful of two of 
the reported leading candidates to replace him, describing 
one as a "bandit" and the other as a farm team criminal 
hoping to get into the major leagues.  End Summary. 
 
Meeting with Senate President 
----------------------------- 
4. (U) On 7/22, the Ambassador called on the new President of 
the Senate, Carlos Filizzola of the socialist Country in 
Solidarity Party (PPS).  Filizzola said he would like to work 
together whenever possible and strengthen relations with us. 
He was open to the idea of traveling to the U.S., noting that 
he has traveled to the U.S. on several occasions and is a 
member of the Inter-American Dialogue. 
 
5. (U) The Ambassador explained the pending Millennium 
Challenge Corporation (MCC) project aimed at improving 
transparency and legislative effectiveness, and stressed the 
need for Paraguay to take ownership of the proposal and 
refine it for final presentation in Washington in three 
months.  Filizzola voiced general agreement with the project. 
 He added that the Congress was working with the 
Inter-American Development Bank and the World Bank on similar 
projects, and that the newly appointed projects coordinator 
for the Congress, Marializ Sosa, would work to ensure 
continuity.  The Ambassador said that he would have the USAID 
Country Director get in touch with Sosa. 
 
6. (SBU) With respect to transparency, Filizzola told the 
Ambassador that he would push for legislation to increase 
citizen participation in government through public hearings. 
He noted that he had done the same as mayor, passing 
ordinances that gave constituents access to public records 
and a voice in the budget process through public hearings. 
When the Ambassador inquired whether the Senate would open 
the Puerto Casado (Moon Sect) land expropriation debate to 
public hearing, Filizzola said there had already been a 
debate on it early in the year, and focused instead on the 
government taking a greater role in resolving the rural 
crisis through technical assistance and credit, typical PPS 
demands.  Additionally, he argued that 52,000 hectares was a 
drop in the bucket for Victoria SA, the Moon Sect company 
that owns the land, and that expropriation was a "rational" 
solution to the crisis since it would generate employment in 
the zone "without affecting Victoria's investment." 
(Comment: It was clear that Filizzola would not be swayed 
that expropriation would have longer term negative effects on 
investment throughout Paraguay.  End Comment.) 
 
7. (U) Filizzola raised the issue of military exercises, 
assuring the Ambassador that the new Congress would respect 
the previous Congress's decision to approve our request for 
immunities and permission for U.S. military personnel to 
enter the country for a series of routine medical and 
training exercises that will take place over the course of 
the next 18 months.  Filizzola opined that the recent debate 
over the issue was merely a reaction to the length of the 
period in question. 
 
8. (U) The Ambassador explained that USAID would terminate 
its family planning program in Paraguay since USAID in 
Washington is shifting funds to Africa, which means that 
USAID will no longer provide contraceptives for distribution 
in Paraguay.  USAID currently provides 95 percent of the 
contraceptives distributed, the Ambassador noted, hoping that 
the GOP would develop a plan to provide needed services. 
Filizzola, a medical doctor, voiced agreement with the aims 
of the USAID program, and stated that he had presented a bill 
on sex education and family planning.  He agreed that it 
would be beneficial for USAID and the Paraguayan commission 
involved in family planning to coordinate as USAID turns the 
reins over to the GOP. 
 
9. (U) In response to the Ambassador's question, Filizzola 
listed the following as his priorities for the legislative 
agenda: 
 
-- Health issues, such as reproductive health 
-- Protection of women and children, and victim assistance 
programs 
-- Reform of the public banking law 
-- Social issues, such as employment and poverty 
-- Decentralization of government 
-- Anti-corruption legislation, such as illicit enrichment 
and influence peddling laws and whistleblower protection 
 
Senate First Vice President 
--------------------------- 
10. (C) Immediately after their meeting with Senator 
Filizzola, the Ambassador called on Senator Alejandro 
Velazquez of the National Union of Ethical Citizens (UNACE) 
party in his capacity as the new First Vice President of the 
Senate.  Prompted only by an inquiry as to how things were 
going, Velazquez meandered for 45 minutes through complaints 
that the atmosphere in the Congress was "conflictive" and 
"destructive" with the opposition threatening to deny a 
quorum any time a majority legislator even "went to the 
bathroom."  Velazquez also confided that a group of Senators 
who "do not accept Filizzola's presidency" had approached him 
about taking over as Senate President, but that he declined 
their offer and would "respect the institution." 
 
11. (C) At the end of the meeting, Velazquez produced a 
suitcase full of cash (local currency equivalent of USD 
120,000) that he was going to take to Oviedo supporter and 
owner of Paraguay's largest daily Aldo Zuccolillo.  Velazquez 
claimed Oviedo was threatening legal action over alleged 
debts against him and others from UNACE cooperating with the 
Colorado Party.  Oviedo's attempt at intimidation would fail, 
he concluded.  (Note: Velazquez' story on the debt was opaque 
and confusing, but he claimed Oviedo was simply trying to 
smear those who abandoned him.  It was not clear why he was 
paying Zuccolillo.  End Note.) 
 
President of Senate Foreign Relations Committee 
--------------------------------------------- -- 
12. (C) Following their meeting with Velazquez, the 
Ambassador called on Senator Adriana Franco in her capacity 
as the new President of the Senate Foreign Relations 
Committee.  (Note: Franco recently left UNACE and returned to 
the ruling Colorado party, something Velazquez had done de 
facto but not formally.  At the end of the meeting, concerned 
that she had made a "grave mistake" in leaving UNACE, Franco 
asked whether the Ambassador had information on whether 
jailed UNACE leader General Lino Oviedo might harm her.  Like 
Velazquez, she claimed Oviedo was threatening her over debts. 
 The Ambassador told her that we did not have any such 
information, but that it appeared Oviedo was under tight 
military control.  End Note.) 
 
13. (C) Franco professed her love for the U.S. as the only 
hope against the leftists ("socialists and communists") that 
surround Paraguay in Latin America, and strong pressure from 
Mainland China.  She asked for increased openness and 
cooperation with the USG, rating current relations with us a 
"7" on a scale of 1 to 10 and hoping that we could get to a 
"10". 
 
14. (C) Franco also asked what Paraguay needed to do to 
achieve the goal of getting to a "10".  The Ambassador noted 
that cooperation was very good in areas such as 
counter-narcotics, anti-corruption and counter-terrorism, but 
that we needed to see progress in important areas such as 
money laundering; and that first and foremost Paraguay needed 
to enact new anti-money laundering legislation.  The 
Ambassador stressed the importance of not creating the 
appearance that such legislation was a U.S.-led project. 
 
Attorney General's Observations 
------------------------------- 
15. (C) Attorney General Oscar Latorre, one of the more 
astute and sober observers of the local political scene, 
shared with the Ambassador later that same day his concern 
that the country's political leadership has embarked on a 
perilous road toward sterile confrontation which could set 
back many of the gains made during the last few years in a 
number of fields.  It will be difficult, he said, for the 
Executive to make significant legislative advances.  Populist 
measures will become harder to resist and short-term 
political calculations -- looking toward the upcoming 
electoral calendar -- may undermine some of the progress made 
and the plans for additional reforms in strengthening 
institutions, including what he described as the unique 
opportunity presented by the MCC Threshold Program. 
 
16. (C) Latorre believes the President should have made a 
serious effort to bring together the key party leaders to 
work out a modus vivendi for another two years, until the 
municipal elections, when cutthroat competition would become 
inevitable.  He expressed concern that the President will 
"make a fatal mistake" if he chooses a new Attorney General 
based principally on political expediency or for other 
unspeakable motives, because it would polarize the country 
and the three significant opposition parties would be joined 
by the private sector and many other societal groups in 
confronting Duarte and the Colorado party.  (Note: Latorre's 
term expires in one month.)  Latorre likened the current 
Congressional President, Socialist Carlos Filizzola, to "road 
kill" the day he steps down 11 months from now because he 
blatantly sold out to attain his current position.  This 
severely limits his maneuvering room as Congressional 
President. 
 
17. (C) Latorre was disdainful of two of the reported leading 
candidates for the AG slot, describing one (Ruben Candia) as 
a "bandit", and the other (Ruben Romero) as a farm team 
criminal hoping to get into the major leagues.  Latorre said 
he warned Duarte Frutos about his concerns and suggested that 
he (Latorre) be appointed for another term even though they 
both know Latorre has to take medical leave for a while, 
since it would give Duarte more time to find a good 
replacement when/if Latorre must resign for health reasons. 
Latorre noted that the only current prosecutor who he thinks 
has the stuff to be an honest and successful AG is Edward 
Irala, currently the Assistant Fiscal for the Department of 
Itapua (Encarnacion). 
 
18. (C) Comment: Latorre's remarks are self-serving, but in 
general they square with our own observations of current 
troubling trends.  Latorre reportedly has cancer, although he 
did not admit it, and he avoided discussing his health except 
to say that he is going to Sao Paulo for some examinations. 
The AG position is probably the second most powerful job in 
the country.  He is independent from the other three powers 
and, as Latorre noted, has information or can collect 
information that can destroy almost anyone in Paraguay. 
KEANE