US embassy cable - 05ASUNCION956

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 000956 
 
SIPDIS 
 
STATE FOR WHA/BSC AND EB/IFD/OIA 
STATE PASS TO USAID FOR LAC/AA 
STATE PASS TO USTR FOR LYANG 
NSC FOR SUE CRONIN 
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: DECL: 07/29/2015 
TAGS: PGOV, PREL, PINR, PA 
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 23-29 
 
REF: A. ASUNCION 939 
     B. ASUNCION 370 
 
Classified By: DCM Kevin M. Johnson, for reasons 1.5 (b) and (d). 
 
1. (U) Summary 
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-- VP Castiglioni Meets with FBI Regional Director 
-- Filizzola and President Duarte Discuss Key Issues 
-- Cabral to Retire at Year's End 
-- Deadly Hantavirus Reappears in the Chaco 
-- Successful Conclusion to EXPO 
-- Second Tier Public Bank Law Goes to President 
 
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VP Castiglioni Meets with FBI Legal Attach 
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2.  (U)  On July 26, Vice President Luis Castiglioni met with 
Buenos Aires-based FBI Legal Attach William Godoy to discuss 
training and cooperation and follow-up on Castiglioni's June 
trip to Washington.  Godoy reported the FBI plans to 
establish a Legal Attach office in fiscal year 2007, pend 
approval of funding.  After the meeting, Castiglioni 
announced to press that Paraguay also will continue to 
receive security support from Colombia, as next week the 
Colombian Motorized Police will conduct training for 
Paraguayan National Police and Military components. 
Castiglioni also told the press that next week officials from 
the Center for Hemispheric Defense Studies will prepare for 
security seminar for senior Paraguayan officials. 
 
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Filizzola and President Duarte Discuss Key Issues 
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3.  (C)  On July 25, newly elected Congress President Carlos 
Filizzola met with President Duarte to discuss the 
appointment of a new Attorney General and the passage of key 
legislation including money laundering and anti-kidnapping. 
Filizzola told the press after the meeting that he agreed 
with Duarte on the need for appointing a capable, respected 
individual to replace Attorney General Oscar Latorre, whose 
term is ending in August. Filizzola noted that a previously 
agreed political agreement not to reelect Latorre will be 
honored.  (Comment: See ref A for more information on 
Duarte's top choices for the Attorney General position.  New 
Justice and Labor Minister Ruben Candia appears to be 
Duarte's preferred candidate.  End Comment.) 
 
4.  (U) During the same meeting, Duarte reportedly asked 
Filizzola to expedite legislation relating to 
money-laudering, a U.S. priority. 
 
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Cabral to Retire at Year's End 
------------------------------ 
 
5.  (C)  The press reported this week that members of 
Congress are seeking to promote Aristides Cabral, a notorious 
corrupt police commander, to be the Chief of the Paraguayan 
National Police. President Duarte withdrew his request for 
Cabral's promotion last March, after Cabral's links with the 
Biera Mar drug trafficking organization became public (ref 
B).  The Ambassador asked President Duarte on July 27 about 
the press story, and Duarte assured him that the press 
article was untrue.  Duarte noted that Cabral will retire at 
the end of this year with 30 years of service and until then 
will remain on administrative leave. 
 
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Deadly Hantavirus Reappears in the Chaco 
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6.  (U)  The deadly Hantavirus Pulmonary Syndrome (HPS) has 
claimed another life in the town of Fildelfia in the rural 
Chaco region.  It had been two years since someone had died 
of HPS.  Over 200 people have been infected, with 21 deaths, 
since it was first discovered in Paraguay in 1987.  Health 
officials expressed concern over the lack of adequate 
intensive care infrastructure to contain HPS in the Chaco. 
HPS is carried by a certain type of Chaco rodent, making 
rural field workers most susceptible, but it is not 
transmitted person-to-person.  Originally thought to exist 
only in the U.S., HPS was first formally identified and 
investigated in Paraguay by a task force from the U.S. 
Centers for Disease Control in 1995. 
 
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Successful Conclusion to EXPO 
----------------------------- 
 
7.  (U)  Paraguay,s annual business and agriculture fair 
concluded on July 24.  The EXPO is a county-fair style 
exposition that takes place in Asuncion, usually drawing 
participation from most large and medium sized businesses 
with operations in Paraguay.  Initial reports claim that over 
725,000 people visited this year's EXPO, sponsored by the 
Rural Association of Paraguay and the Paraguayan Industrial 
Union.  This year's attendance increased by about 150,000 
from 2004, despite several days of cold and rainy weather. 
Organizers highlighted the Industrial Pavilion as a great 
success with 55 companies participating, also an increase 
from last year.  According to local news reports, the EXPO 
will be responsible for around US$19 million in future 
investments and business agreements in Paraguay. 
 
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Second Tier Public Bank Law Goes to President 
--------------------------------------------- 
 
8.  (U)  On July 21, the Chamber of Deputies passed without 
modifications the second tier public bank law previously 
passed by the Senate.  The law creates the Financial 
Development Agency (AFD), which will combine several smaller 
entities and act as the sole wholesale lender meant to 
channel long-term financing provided by the IFIs and other 
sources, such as the social security fund, to first-tier 
public and private banks.  The IMF had previously indicated 
that it was satisfied with the version passed by the Senate, 
despite some changes from the version presented by the 
executive.  The law exempts the bank from restrictions on 
refinancing and Basle guidelines on loan classification, but 
provides the executive with sufficient latitude to write the 
regulations implementing the law in such a way as to provide 
sufficient prudential safeguards. 
KEANE