US embassy cable - 05ASUNCION1300

UNCLAS SECTION 01 OF 03 ASUNCION 001300 
 
SIPDIS 
 
FSI FOR LMS/SPS - MCMULLEN 
PASS TO USAID 
 
E.O. 12958: N/A 
TAGS: AFSI, KDEM, PA, EAID 
SUBJECT: PARAGUAY DEMOCRACY BUILDING: SUCCESS STORIES AND 
BEST PRACTICES 
 
REF: STATE 182307 
 
1. In support of the Secretary's emphasis on transformational 
diplomacy and the request of FSI's Leadership and Management 
School, the following is a short list of success stories and 
best practices, submitted AMEmbassy Asuncion. 
 
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Municipal Finance 
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2. USAID sponsored efforts have helped local governments 
strengthen their response to citizens, needs by providing 
improved public services, such as potable water, garbage 
collection, street improvements and maintenance, health 
clinics, and schools financed with enhanced revenue 
collection and increased expenditure effectiveness.  As tax 
collection has improved, related activities have promoted 
citizen participation in local decision-making, transparency, 
accountability and integrity to control corruption and 
increase citizens, faith in their local government.  As a 
result, local governments are demonstrating that democracy 
does work by listening and involving and responding to their 
citizens. 
 
3. Since 2002, 40 municipalities have increased property and 
commercial tax collection by an average of 60 percent, 
resulting in an additional $6 million in revenue; more than 
200 new or improved local services have been implemented; and 
over 100 transparency and participation governance 
mechanisms, such as public budget hearings, citizen 
committees for monitoring public works, access to information 
policies, and education and development councils have been 
implemented.  Municipalities have increased accountability to 
their citizens through transparent budgeting, improvements in 
financial software, setting internal controls, and removing 
corrupt public officials from office.  The overall result of 
USAID,s local government program has been that people have 
learned how democracy works at the local level by exercising 
their rights and responsibilities and seeing that democratic 
institutions can be responsive, credible, and promote good 
governance. 
 
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Global Development Alliance (GDA) 
--------------------------------- 
 
4. In 2004, USAID initiated a GDA with a local NGO, Alter 
Vida, to strengthen good governance and to facilitate local 
economic development.  USAID emphasizes empowering local 
partner organizations to negotiate alliances, build 
agreements with the business sector, and reach formal 
agreements among donors.  Three significant alliances were 
formed during the first year of project implementation: 
 
-- A bio-diesel project that will include a new processing 
plant and coconut micro-producers benefiting 500 families has 
obtained USD 1.2 million in funding with USAID assistance. 
This project works with a private bottling company, the 
Catholic Church, six municipal governments and one 
departmental government. 
 
-- A 15-year recycling project to improve life conditions of 
Asuncion metropolitan area solid waste landfill "recyclers" 
is part of a loan and grant from the IDB and other resources. 
 The project works closely with the Municipality of Asuncion, 
landfill recyclers and their associations, civil society 
organizations, and businesses to sell recycled materials to 
industrial plants for re-processing. 
 
-- Recently, an environmental decentralization project 
working in coordination with the National Environmental 
Secretariat in one department was approved with USAID 
 
SIPDIS 
support.  This will transform a completely centralized and 
ineffective bureaucracy by decentralizing powers and 
functions and establishing legal, administrative and 
operational structures that allow for environment control and 
auditing at the departmental level in such areas as 
environmental impact studies. 
 
5. These three projects have mobilized funds and a small 
portion of in-kind resources for a total of USD 2,072,860, of 
which only USD 130,545 are USAID funds.  This approach should 
help make these types of projects more sustainable, involves 
a diversity of actors, helps build local capacity, focuses 
USAID partner on looking for new resources, promotes a 
greater sense of ownership, and USAID achieves a greater 
development impact.  Alliance members are beneficiaries and 
contributors to the program goals based on common interests. 
 
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Congressional Public Hearings 
----------------------------- 
 
6. In 2004, USAID took advantage of its unique experience in 
promoting public hearings in the Congress and developed a 
standard operating procedures guide and internal regulations 
for both chambers of the Congress.  With these procedures, 
public hearings on proposed legislation at the Congress are 
now being implemented in a more systematic and transparent 
way.  This has proved to be a key instrument for ensuring 
citizen participation and the involvement of other sectors of 
the Paraguayan society in the legislative process.  Prior to 
this assistance there had only been three public hearings in 
the Congress.  After the guide was developed and training 
provided, there have been 34 hearings in a one-year period 
(September 2004 - September 2005).  USAID provided 
approximately USD 35,000 to support this activity, 
demonstrating that even with small amounts of funding 
successful results can be achieved. 
 
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Citizen Participation in Political Process 
------------------------------------------ 
 
7. For more than a year, USAID provided support to a 
multi-sectorial advocacy group of more than 20 civil society 
organizations, representatives from the National Integrity 
Commission, media representatives, and members of the 
Congress in developing a draft Freedom of Information Act. 
The group presented the draft legislation to 16 legislators 
and a public hearing was held to receive input.  The 
legislation is now in committee for review. 
 
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Human Rights 
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8. In August and September of this year, the Commander of the 
Armed Forces, General Jose Kanazawa, twice issued a mea culpa 
for errors committed by military personnel under his command. 
 Military personnel have been accused of harassment, beatings 
and killings of civilians as well as deaths of conscripts. 
This action shows progress in the GOP and its more senior 
officials recognizing the importance of human rights.  The 
speeches by General Kanazawa were in public venues and, in 
one case, President Nicanor Duarte Frutos was present and 
accepted the apology. 
 
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Trafficking in Persons 
---------------------- 
 
9. The GOP and the US Embassy, along with the Department of 
Homeland Security, organized and conducted a Trafficking in 
Persons Assessment study to assess conditions and make 
recommendations for immigration and border controls that 
would assist them in combating the problem of trafficking in 
persons, which has increased by 27 percent in the last 5 
years.  The study is a blueprint for directing USG resources 
over the next few years to assist the GOP in its efforts. 
Also, it identifies key areas where the GOP will need to 
focus to curb the increase in trafficked persons. 
 
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Anti-Corruption and Rule of Law 
------------------------------- 
 
10. The public continues to suspect the government of 
widespread corruption and complains about impunity.  However, 
President Nicanor Duarte Frutos continues to denounce 
corruption both in public and in private.  There are a number 
of achievements and reforms, either undertaken or under 
consideration -- several with USG support -- that reflect 
well on the government's reform record and intentions, 
including: 
 
-- Strong U.S.-Paraguayan counter-drug cooperation, building 
on DEA support and INL funding, highlighted by the arrest of 
Mendes Mesquita, a notorious Brazilian drug trafficker from 
the Beira Mar organization, in November 2004, and his 
extradition to the U.S., in June 2005, in the face of 
significant political pressure for his release; 
 
-- UTE, the anti-piracy unit supported by INL funding has a 
strong track record of seizures of counterfeit goods.  The 
unit's leader, after being offered USD 40,000 to release 
several containers of merchandise, worked the case that 
culminated in the 9/15 arrest of a politically connected 
(Colorado) customs official from the Cuidad del Este area who 
has been an important player in facilitating trade in 
contraband and counterfeit goods in the region; 
 
-- Establishment of a respectable and well trained FIU thanks 
in large measure to the support of a Treasury Department 
Office of Technical Assistance (OTA) Resident Enforcement 
Officer (REA) and INL funding used for training and equipment; 
 
-- Creation of three new investigative units: in Customs - 
the tax administration and an anti-corruption unit - and, an 
inspector general unit within the Ministry of Finance, all 
under the guidance of OTA REA and trained and equipped in 
part with INL funds; 
 
-- The first-time conviction of individuals, in late 2004, 
for involvement in trafficking in persons (unfortunately the 
two convicted were released on appeal, but we remain 
reasonably confident the Supreme Court will reinstate their 
six year sentences); 
 
-- The first-time conviction of a customs employee for 
illicit enrichment earlier this year on the basis of a law 
adopted in late 2004; 
 
-- A continued increase in year-on-year tax and customs 
revenues, sustaining momentum following huge gains realized 
in the government's first year; 
 
-- Reforms by the Judicial Council, supported by USAID, to 
reduce political factors in the selection of judges and 
prosecutors, through the introduction of more objective 
selection criteria, including a written examination; 
 
-- Requests by the Ministry of Finance and the Supreme Court 
for USAID assistance in the development of whistle blower 
protection programs; 
 
-- Announcement of a new tax regime to encourage 
formalization of some of the leading commercial sectors in 
Ciudad del Este, a haven for contraband, piracy, and other 
illegal activity. 
 
-- Continued strong macroeconomic management, supported by 
President Duarte, that has led to strong performance 
under Paraguay's IMF program, a public commitment to seek a 
follow-on program to last through Duarte's term, and 
continued fiscal restraint expected to achieve a balanced 
budget this year. 
KEANE