US embassy cable - 05ASUNCION1174

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 001174 
 
SIPDIS 
 
STATE FOR 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: 09/15/2010 
TAGS: PGOV, PREL, ECON, PA 
SUBJECT: PARAGUAY SUMMIT: OPPOSITION ABSENT, BUT GOOD WORDS 
ON MONEY LAUNDERING AND BUDGET 
 
Classified By: PolOff Sterling D. Tilley, reasons 1.4(b) and (d). 
 
1. (U) Summary.  On 9/13 President Duarte convened a meeting 
with senior officials from the executive, legislative and 
judicial branches to discuss issues that included foreign 
relations, internal security, corruption, the 2006 budget, 
and Mercosur.  Duarte, Senate President Carlos Filizzola, 
Country in Solidarity Party (PPS), and Supreme Court Chief 
Antonio Fretes signed an agreement on these issues.  The 
Ambassador discussed the outcome of the summit with Alejandro 
Velasquez, a Colorado Party Senator, who indicated that 
Duarte has taken a nationalist stance on foreign policy and 
also discussed the passage of the anti-money laundering law, 
the 2006 budget, and renegotiation of the agreements of the 
Itaipu and Yacyreta Dams.  End Summary. 
 
2. (U) On September 13, the Fourth Summit of the Three 
Government Branches completed its work after 4 hours of 
discussions.  The summit was held in the Congress and headed 
by President Nicanor Duarte Frutos, Senate President Carlos 
Filizzola, PPS, and Supreme Court Chief Justice Antonio 
Fretes, in addition to other high ranking officials from the 
three branches. (NOTE: Representatives of the Authentic 
Radical Liberal Party (PLRA), Beloved Fatherland Party (PPQ), 
and the National Union of Ethical Citizens Party (UNACE) did 
not attend, qualifying such meetings as a waste of time 
rather than a genuine forum to discuss serious issues.  End 
note.) After the meeting, Duarte Frutos held a press 
conference announcing some details of the signed agreement, 
which highlighted the government's achievements as well as 
its primary priorities. 
 
3. (C) The Ambassador discussed the substance of the meeting 
with Alejandro Velasquez, a Colorado Party (former UNACE) 
Senator and strong supporter of the U.S.  Velasquez stated 
that President Duarte started the discussion of foreign 
relations by saying that Paraguay is recovering the dignity 
that has been smeared by its neighbors who do not respect 
agreements or understandings.  Duarte continued, "when we 
reached agreements with Cuba and Venezuela we were accused of 
being leftists.  Now that we are also expanding ties with the 
U.S. we are being accused of being rightists.  Neither is 
correct.  We are pursuing Paraguay's national interest and we 
will continue to have good relations with all of those 
countries and others." 
 
4. (C) According to Velasquez, Duarte said that he would like 
to see the passage of anti-money laundering (AML) legislation 
and urged Velasquez to coordinate with Senators Gustavo 
Pedrozo and Bader Rachid, the presidents of the Finance and 
Legislative committees reviewing the law. (COMMENT: Rachid 
has been a strong opponent of anti-money laundering 
legislation.  Asking Velasquez, a well known US ally, rather 
than more powerful Senators to push the law is a mixed 
signal.  However, it is positive that Duarte mentioned it. 
End Comment).Duarte urged Congressional leadership against 
exceeding the budget caps for 2006.  He said that Paraguay 
sought to re-negotiate the agreements on the Itaipu and 
Yacyreta Dams.  At this current time, he said, Paraguay is 
paying 11 percent interest on the debt while market rates 
were closer to 4 1/2 percent.  Duarte believes it would be 
fair for Paraguay to pay 7 percent, which would save Paraguay 
USD 150 million annually money he wants to use for social 
programs. 
 
5. (C) Comment: The opposition parties discount the periodic 
"Summit of the Three Powers" as little more than a public 
show.  For the first time, the leading opposition parties 
refused to send representatives.  Duarte uses these meetings 
to demonstrate his administration's commitment on key issues 
and consolidate support from other segments of the government 
for his agenda.  His appeal for adoption of the AML and his 
call to hold the line on the budget are noteworthy, 
particularly in view of the fact that supporters from his own 
party represent some of the more serious obstacles on both 
accounts. 
KEANE