US embassy cable - 05ASUNCION1186

UNCLAS ASUNCION 001186 
 
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: N/A 
TAGS: PHUM, PGOV, PA, PREL, ECON 
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, SEPTEMBER 
11-17 
 
1. (U) Summary 
      -- Paraguay Fourth Worst in Wealth Disparities 
      -- Paraguay Rejects Brazilian FM Statement 
 
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Paraguay Fourth Worst in Wealth Disparities 
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2. (U) On 9/12, the United Nations Representative in Paraguay 
announced that, according to a recent UN Development Program 
(UNDP) survey, Paraguay ranked as the fourth worst place in 
the world in terms of disparities of wealth, and the worst 
country in Latin America.  The data is part of the Human 
Development Index (HDI), which is produced by UNDP. The HDI 
provides clear statistical reference on the number of people 
living under extreme poverty, based on unemployment rates, 
lack of opportunities and the absence of public policies by 
governments. According to the UN report 10 percent of the 
people who live in extreme poverty in Paraguay only received 
0.6 percent of the country,s wealth, while 10 percent of the 
rich people receive 45.5 percent of Paraguay,s GDP, putting 
Paraguay,s wealth disparity at 73.4 percent.  The projection 
of the wealth disparity in the country continues a negative 
trend, especially after reports from the World Bank in 2004 
ranked Paraguay the lowest country in economic development in 
the South American region. 
 
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Paraguay Rejects Brazilian FM Statement 
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3. (U) In recent weeks, Brazil has conveyed concern about 
Paraguay's "expanding" relationship with the US calling on 
Paraguay to explain the recent visit by SECDEF Rumsfeld, 
US-Paraguayan military exercises and comments by Vice 
President Luis Castiglioni about pursuing a bilateral trade 
agreement with the US.  Brazil's FM charged a US-Paraguayan 
bilateral trade agreement would violate Paraguay's 
obligations under Mercosur.  This response from Brazil has 
sparked resentment in Paraguay.  President Duarte reaffirmed 
Paraguay's commitment to honor its obligations under Mercosur 
but also said that Paraguay has the right to maintain 
relations with any country, provided benefits accrue to 
Paraguay from those relations.  On 9/15, Paraguay's Senate 
unanimously approved a resolution, that 
 
--"rejected the unfortunate comments made by Brazilian FM 
Celso Amorim in reference to the recent contacts made in the 
framework of relations with the Government of the United 
States;" 
--"ratified its commitment to strengthening ties in a 
framework of respect for the sovereignty, dignity and 
solidarity of MERCOSUR;" and, 
--"ratified the full sovereignty of Paraguay in its 
interational relations." 
 
5. (U) COMMENT: Brazil, in raising the ire of Paraguay with 
its indiscreet remarks, did more to tame concern over 
mythical U.S. designs on its land and water than any response 
we could ever make.  That is not to say people have stopped 
being concerned about U.S. intentions.  It's just they are 
now more angry at Brazil, a country they view as historically 
disdainful and unresponsive to Paraguayan concerns and 
interests. End Comment. 
KEANE