VZCZCXYZ0000
RR RUEHWEB

DE RUEHAC #0162/01 0451420
ZNY CCCCC ZZH
R 141420Z FEB 06
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC 3766
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHLP/AMEMBASSY LA PAZ FEB NAIROBI 0119
RHEHNSC/WHITE HOUSE NSC WASHDC
RUMIAAA/USCINCSO MIAMI FL//SCJ3/SCJ33/SCJ34/SOCSO LNO//

C O N F I D E N T I A L ASUNCION 000162 
 
SIPDIS 
 
SIPDIS 
 
NAIROBI FOR MICHAEL FITZPATRICK 
SOUTHCOM FOR POLAD BARBARA MOORE 
NSC FOR SUE CRONIN 
 
E.O. 12958: DECL: 02/10/2016 
TAGS: PGOV PREL KDEM CVIS KCRM PINR BL PA
SUBJECT: PARAGUAY: AMBASSADOR MEETS WITH VP CASTIGLIONI 
 
 
Classified By: ECON Patrick R. O'Reilly for reasons 1.4(b),(d). 
 
------- 
SUMMARY 
------- 
 
¶1. (C) During the Ambassador,s February 6 introductory call 
on Vice President Castiglioni, the VP was eager to establish 
a productive relationship.  Castiglioni raised the election 
of Evo Morales in Bolivia and said that Bolivia,s future is 
a source of concern given its proximity and the possibility 
that secessionist pressures could increase.  He suggested 
that the USG could consider Paraguay an &anchor8 of 
stability in the region.  The Ambassador raised the 
importance of the passage of the anti-money laundering law, 
which he called a litmus test of the GOP,s political will. 
The VP claimed that it was a priority for the GOP, but one of 
the VP,s aides expressed pessimism that it would be passed. 
The Ambassador urged a rapid resolution of the disparity 
between the short-term visas issued to American citizens and 
the US policy of issuing ten-year visas.  The VP asked for a 
reprieve until after the February 19 internal Colorado Party 
elections, but showed the Ambassador a draft Presidential 
Decree that would eliminate the visa requirement for American 
citizens, replacing it with an administrative fee to be paid 
at the point of entry into Paraguay.  The Ambassador and VP 
also discussed potential cooperation on arranging for a trade 
mission from Florida to visit Paraguay.  End Summary. 
 
--------------------------------------- 
SEEKING INVESTMENT, TRADE, AND SECURITY 
--------------------------------------- 
 
¶2. (U) On February 6, Ambassador Cason, accompanied by A/DCM, 
had his introductory call on Vice President Castiglioni. 
Castiglioni had just returned from two weeks in the United 
States, during which he spent some time meeting with 
potential investors and promoting Paraguay as a place with 
commercial opportunities.  Castiglioni was gracious and eager 
to establish a positive and productive relationship with 
Ambassador Cason. 
 
¶3. (C) Castiglioni began by making reference to an article he 
saw in a Miami paper on Saturday, February 4, which quoted a 
senior US military commander who evidently made the point 
that adequate national security was a prerequisite for 
development.  He promised to send the Ambassador a copy of 
the article, and made reference to the statements several 
times, which he said echoed discussions he had had with Vice 
President Cheney in June 2005.  The VP asserted that the US 
and Paraguay should base our relationship on mutual respect 
and cooperation, and reiterated the importance of regional 
security cooperation for development and poverty reduction. 
 
----------------------- 
EXPORTS, EDUCATION, MCC 
----------------------- 
 
¶4. (U) The Ambassador agreed, and told the VP that he had 
three goals in mind for his time in Paraguay: 1) to help 
increase Paraguayan exports to the US, noting that trade is a 
two-way street, and specifically mentioning meat and stevia 
(a natural sweetener derived from a bush native to Paraguay); 
2) to find a way to make more scholarships available to 
Paraguayan students and 3) to work together to increase 
transparency and reduce informality.  He shared with the VP 
that we expected a positive outcome from the Millennium 
Challenge Corporation's February 8 Board meeting. 
 
¶5. (C) Castiglioni lamented that in many countries in the 
region, the people don't see the benefits of democracy.  He 
blamed poor governance, and said the point needs to be 
reached where citizens appreciate democracy as a common good. 
 The Ambassador emphasized the need to work together to 
strengthen institutions, and the VP agreed that the MCC 
Threshold Program would be of great help.  The Ambassador 
underscored the importance of solid performance on the 
challenging agenda set forth in the Threshold Program, since 
Paraguay will have to make significant progress in order to 
one day qualify for the MCC,s main program.  Castiglioni 
later commented on the importance of reducing informality and 
fostering an open, predictable and stable economy. 
 
--------------------------------------------- --- 
WORRIES ABOUT MORALES ) BUT PARAGUAY AN &ANCHOR8 
--------------------------------------------- --- 
 
¶6. (C) The Vice President raised the election of Evo Morales 
in Bolivia and said that Bolivia,s future is a source of 
concern for the GOP.  The VP noted that not only is Bolivia a 
neighbor, but that the provinces bordering Paraguay have 
diverging interests from the capital, which might one day 
lead to decisions &affecting Bolivia,s sovereignty.8  The 
Ambassador noted that while skepticism is perhaps prudent, 
Morales has some political capital and the ability to do some 
good things.  He told the VP that the USG would wait to judge 
Morales' actions, and hope that he makes the right decisions 
for the people of Bolivia.  The VP used the discussion of 
Bolivia to make a pitch for Paraguay being an &anchor8 of 
stability and security in the region, and an even more 
important partner for the United States. 
 
---------------------------- 
COMMERCIAL TIES WITH FLORIDA 
---------------------------- 
 
¶7. (U) The VP briefed the Ambassador on meetings he had in 
Florida with business leaders and with Governor Bush in 
November 2005, with the eventual goal of arranging a Florida 
trade mission to Paraguay.  Sectors that have been discussed 
include energy, textiles, beef, and technology.  The Vice 
President will be in Florida in mid-March with the Minister 
of Industry and Commerce Raul Vera, Presidential Economic 
Advisor Carlos Walde, and some prominent Paraguayan business 
leaders.  The Ambassador noted that he would be in Miami at 
the same time and both discussed the possibility of the 
Ambassador's participation in the event, which greatly 
pleased the VP. 
 
--------------------------------- 
ANTI-MONEY LAUNDERING LEGISLATION 
--------------------------------- 
 
¶8. (C) The Ambassador raised the importance of the passage of 
the anti-money laundering law, which he said the USG 
considers a litmus test of the GOP,s political will. 
Castiglioni said that the Executive Branch has been fighting 
for passage for a long time, and noted that President Duarte 
has raised it publicly and strongly pushed for passage last 
year in a meeting of the three branches of government. 
Castiglioni said that there have been advances, and that the 
status should be clearer in March.  The VP,s Economic 
Advisor, Luis Maria Duarte, related that Carlos Yegros, the 
director of Paraguay's Financial Intelligence Unit 
(SEPRELAD), had expressed pessimism to him after a number of 
meetings with Senators, who Yegros claimed did not understand 
the importance of the law. 
 
¶9. (C) The Ambassador and the Vice President agreed on a 
strategy in which President Duarte would meet with the 
Colorado Senators, after which the Ambassador would host four 
or five key Senators from the Colorado party and then 
separately from opposition parties at the Residence where we 
could push for passage.  The VP claimed to be more optimistic 
than Yegros, noting that a few notable opponents to the law 
had changed their views. 
 
---------------- 
VISAS FOR AMCITS 
---------------- 
 
¶10. (C) The Ambassador stressed the importance of resolving 
the disparity between Paraguay granting 90-day visas for 
American citizens, while the US grants Paraguayans ten-year 
visas.  He noted that it is in Paraguay's interested to find 
a solution that will benefit Paraguay by making it easier for 
tourists and investors to travel here.  The Vice President 
said that he has been working with Economic Advisor Carlos 
Walde and that he had spoken to President Duarte about the 
issue.  The VP asked for a reprieve until after the February 
19 internal Colorado Party elections, but showed the 
Ambassador a draft Presidential Decree that would eliminate 
the visa requirement for American citizens, replacing it with 
an administrative fee to be paid at the point of entry into 
Paraguay. 
 
------------------------------------------ 
COMMENT: VP A FRIEND...BUT CAN HE DELIVER? 
------------------------------------------ 
 
¶11. (C) Less populist, more pro-U.S., and with private sector 
experience, Castiglioni is a positive influence on President 
Duarte and our outspoken ally.  As internal Colorado 
elections progressed, his differences with the President have 
become more public, however, and his influence may be 
declining.  He has publicly disagreed with Duarte several 
times in recent months, only to disappear from public view at 
other moments.  His advice was (by his own admission) 
decisively rejected by the President on some issues of major 
importance to U.S. (e.g. Cabral, American Airlines 
controversy, and visas).  Castiglioni has supporters within 
his party, especially in the business sector, and is a useful 
complement to Duarte's populism, as long as he is not 
considered disloyal. 
CASON