US embassy cable - 05ASUNCION1246

UNCLAS SECTION 01 OF 02 ASUNCION 001246 
 
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, SEPT. 25 - 
OCT. 1 
 
1. (U) Summary 
      -- Export Agency Head To Visit Iran 
      -- Death Of Customs Official Leaves Questions 
      -- LOA for INL Funds Signed 
      -- SENAD Agents Arrest Narco-Trafficker in Asuncion 
      -- Paraguay 5th Worst in Global Competitiveness Report 
      -- Asuncion Hosts First Ladies Conference 
 
 
 
-------------------------------- 
Export Agency Head To Visit Iran 
-------------------------------- 
 
2. (U) Iran,s concurrent ambassador to Uruguay and Paraguay, 
Mohammad Faraji, has invited Luis Morinigo, head of the 
national export promotion agency, ProParaguay, to visit Iran. 
 Plans for the visit are being coordinated by Iran,s 
Ministry of Economy, and are expected to include visits to 
industrial sites and meetings with the Iranian chamber of 
commerce.  Morinigo was quoted by local media indicating 
Iran,s interest in purchasing rice and wheat from Paraguay. 
Local producers, he said, could benefit from exchanges of 
technology, chemicals and farm implements.  Morinigo noted 
that Iran,s purchases of beef and soy from Brazil amount to 
approximately USD one billion per year, and that Paraguay's 
lower prices make it poised to compete for a share of the 
Iranian market. 
 
------------------------------------------ 
Death Of Customs Official Leaves Questions 
------------------------------------------ 
 
3. (SBU) Yolanda Benitez, Paraguayan Customs Director at a 
private port in Ciudad del Este, was murdered on 9/23. Press 
coverage has speculated that the death was a warning to 
Customs Director Margarita Diaz de Vivar, who has been  seen 
as attacking corruption.  President Duarte called a press 
conference at his residence on 9/25 and spoke about the 
seriousness of the attack and the need to rein in criminals 
in Cuidad del Este.  Embassy sources, however, indicate that 
Benitez herself was corrupt, and that her death may have had 
nothing to do with reforms within the customs service.  The 
press reports that suspicion is growing about the involvement 
of Benitez, boyfriend.  Law enforcement sources indicate 
that much of the forensic evidence in the case was 
mishandled, reducing the chances of an accurate investigation 
into the death. Attorney General Ruben Candia Amarilla has 
indicated that he plans to replace many of the prosecutors 
working in Ciudad del Este.  Also, National Police Commander 
Fidel Isasa ordered the replacement of Nestor Recalde, the 
director for the Fourth Police Zone, and Norberto Rivas, the 
police chief in Ciudad del Este. 
 
------------------------ 
LOA for INL Funds Signed 
------------------------ 
4. (U) On 9/27, the Ambassador and FM Rachid signed a Letter 
of Agreement on the terms for delivery of approvimately USD 
600,000 in INL funding to the GOP.  Paraguay's Anti-Drug 
Secretariat (SENAD), the Secretariat for the Prevention of 
 
SIPDIS 
Money Laundering (SEPRELAD), and the Ministry of Industry and 
Commerce's Specialized Technical Unit and Statistics Center 
will receive these funds to support projects to combat 
narcotics trafficking, money laundering, and IPR violations. 
Of the USD 324,000 dedicated to projects to fight IPR 
violations, USD 139,000 in funds will go to Paraguay's Office 
of the Attorney General to enhance the ability of prosecutors 
to investigate and prosecute IPR violations. 
 
 
--------------------------------------------- --- 
SENAD Agents Arrest Narco-Trafficker in Asuncion 
--------------------------------------------- --- 
 
5. (U) On 9/27, during a routine inspection of TAM airlines 
at Asuncion International Airport, the National Anti-Drug 
Secretariat (SENAD) arrested Cristian J.Geleano Oviedo for 
 
SIPDIS 
cocaine trafficking.  With the help of a SENAD canine unit, 2 
kilos of cocaine were found hidden in the compartments of 
Oviedo,s luggage. According to SENAD agents the cocaine 
destination was Valencia, Spain. 
 
 
--------------------------------------------- ------ 
Paraguay 5th Worst in Global Competitiveness Report 
--------------------------------------------- ------ 
 
6. (U) On 9/28, Local press reported that Paraguay had ranked 
5th worst (113 out of 117 countries) in the Global 
Competitiveness Report (GCR) produced by the World Economic 
Forum. According to the GCR, Paraguay's low ranking reflects 
concern about the weak state of institutions, corruption, 
uneven respect for rule of law, diminishing respect for 
property rights and the implications these and other factors 
have had for macroeconomic management in the country. 
Several commentators expressed concern that the report would 
make it more difficult for the country to attract foreign 
investment. 
 
-------------------------------------- 
Asuncion Hosts First Ladies Conference 
-------------------------------------- 
 
7. (U)  From September 26-30, Paraguay hosted the 13th 
Conference of First Ladies, Spouses, and Representatives of 
Heads of State and Government of the Americas.  First Ladies 
from 11 countries attended, including Colombia, Panama, 
Guatemala, Costa Rica, El Salvador, and Chile.  Nine 
countries sent representatives in lieu of their country,s 
First Lady. Ambassador to the UN Commission on the Status of 
Women, Ellen Sauerbrey, represented Laura Bush at the 
conference.   Local press highlighted the absence of 
Paraguay,s MERCOSUR partners, as Brazil and Argentina sent 
only a representative and Uruguay did not participate in the 
conference. 
 
8. (U)  Each First Lady or representative provided a brief 
summary centered on the conference,s theme, Women and 
Family, which included highlights of programs and activities 
offered in their countries to aid the advancement of health 
care, education, reduction of poverty for women and children. 
 In her remarks, Ambassador Sauerbrey highlighted the 
importance of the family, improved access to health care, the 
importance of literacy for women, and U.S. AID programs 
throughout the region. All countries present signed the 
Conference Declaration and approved Action Plan, although 
neither document called for any substantive results, such as 
enhanced aid programs. 
KEANE