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UNCLAS ASUNCION 001200 
 
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STATE FOR WHA/BSC, INL/LP (JIM HIDES) 
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STATE PASS TO USAID FOR LAC/AA 
STATE PASS TO USTR FOR LYANG 
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TREASURY FOR OSIA MAUREEN WAFER 
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR 
COMMERCE FOR ITA SARAH COOK 
SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, NOVEMBER 
25 - DECEMBER 1 
 
 
¶1. (U) TABLE OF CONTENTS: 
 
-- Oviedo Sentence Confirmed, Prompting Protests 
-- UN Official Discusses Torture 
-- Pension Fund President Indicted 
-- Security Expert Talks About Military Transformation 
-- Supreme Court Justice Fretes Rejected by Opposition 
-- Paraguay Ranked an Imperfect Democracy 
-- Government Reduces Time To Open a Business 
-- Languishing Corruption Cases: aka, Impunity 
-- HIV/AIDS Prevention 
 
OVIEDO SENTENCE CONFIRMED, PROMPTING PROTESTS 
 
¶2. (U) The Supreme Court rejected a motion by General Lino 
Oviedo and UNACE Senator Jose Manuel Bobeda November 14 to 
overturn their convictions and sentences of 3 to 10 years 
respectively for their involvement in the 1996 coup attempt. 
Oviedo and Bobeda had argued it was unconstitutional for 
their case to have been tried before a military court. 
Oviedo was imprisoned upon his return in June 2004 from 
having taken refuge in Brazil and is now only in the third 
year of his 10-year sentence.  Bobeda has already completed 
an abbreviated version of his sentence and had been trying 
essentially to clear his name.  Separately, the Supreme Court 
ruled November 30 that no new evidence had surfaced to merit 
reconsideration of Oviedo's sentence.  Several Oviedo 
supporters protesting Oviedo's continued imprisonment 
crucified themselves November 29 in downtown Asuncion, 
evoking shock but producing no impact on legal decisions. 
 
UN OFFICIAL DISCUSSES TORTURE 
 
¶3. (U) Manfred Nowak, the U.N. Special Rapportuer to the U.N. 
High Commissioner for Human Rights, released his preliminary 
findings on "Torture and other Cruel, Inhumane or Degrading 
Treatment in Paraguay" to members of the Diplomatic Corps 
November 29.  Nowak noted that torture "does exist" in 
Paraguay however, he found the government willing to address 
the problems that exist.  He stated persons are most likely 
to encounter torture or inhumane treatment while in police 
custody.  Nowak referred to testimonials about forced 
confessions via the use of suffocation and/or tools to 
squeeze testicles.  (NOTE: According to Attorney General 
records, no one has been prosecuted or convicted of torture 
since 1999. END NOTE). 
 
¶4. (U) The Special Rapportuer's report asserts that 
corruption in the prison system is endemic because the 
government does not provide basic needs.  Nowak described 
conditions as "alarming," expressing concern about unsanitary 
food, health conditions, limited authority of guards over 
prisoners and inadequate dormitory facilities.  The report 
found no evidence of forced recruitment of children by the 
military, however, hazing still remains a problem.  (NOTE: 
The U.N. is preparing human rights booklets for distribution 
to soldiers.  Henry Jackelen, the U.N. Resident 
Representative, stated that the U.N. plans to establish a 
working group with the Diplomatic Corps to evaluate the human 
rights programs and progress in Paraguay. END NOTE). 
 
PENSION FUND PRESIDENT INDICTED 
 
¶5. (U) The president of the Municipal Pension Fund, Edgardo 
Gomez Zaputovich, was indicted November 27 by prosecutor 
Rocio Vallejos of the Attorney General's Economics Crime 
Unit.  Gomez Zaputovich allegedly accepted bribes and caused 
significant economic loss to the Fund by proposing and 
ordering unreasonable purchases of stock.  The total economic 
loss caused to the Fund amounts to approximately USD 400,000. 
 The indictment is based on evidence provided by the Support 
Unit of the Office of the Controller,s General, which 
receives technical assistance from USAID.  The head of the 
Municipal Pension Fund,s investment department and one 
member of the executive council were also indicted for their 
involvement in causing economic loss to the Fund. 
 
 
 
SECURITY EXPERT TALKS ABOUT MILITARY TRANSFORMATION 
 
¶6. (U) Dr. Michael Gold-Biss, a National Security Professor 
at the Center for Hemisferic Defense Studies at the National 
Defense University, conducted a series of meetings with VP 
Luis Castiglioni, Members of Congress and senior military 
officials November 27-30 regarding military transformation 
and modernization.  Gold-Biss stressed the need for Paraguay 
to develop a national security strategy with guidance from 
the President, in order to modernize and transform the 
military into a force that can meet the challenges they face 
internally and in the region.  Gold-Biss and Vice 
Presidential Advisor Juan Facetti are working on creating a 
working group of some 10-12 experts who would convene 
potentially in February 2007 -- as a follow-up to the CHDS 
seminar in Asuncion in September 2005 -- with a view to 
developing a National Security Strategy.  (COMMENT: 
Gold-Biss' visit occurred at an opportune moment with the 
identification of a new Commander of the Armed Forces in 
General Bernardino Soto Estigarribia, who has sounded a 
commitment to military reforms.  It remains to be seen 
whether Soto will be able to garner sufficient support from 
disperse political sectors to forge a meaningful and 
implementable defense strategy. END COMMENT). 
 
SUPREME COURT JUSTICE FRETES REJECTED BY OPPOSITION 
 
¶7. (U) The Senate, controlled by the opposition, rejected the 
confirmation of Supreme Court Justice Antonio Fretes to 
another five-year term. The opposition (including Colorado 
dissident Senator Julio Dominguez) voted 27 against 17 
Colorado votes for Fretes.  The opposition set its sights on 
removing Fretes immediately following the Supreme Court's 
decision in early 2006 to allow President Duarte to 
simultaneously assume the presidency of the Colorado Party. 
Fretes was one of 5 Supreme Court Justices that sided with 
Duarte.  The opposition argued the Supreme Court's decision 
was in violation of Article 237 of the Constitution which 
prohibits a sitting president from holding other positions. 
Fretes will remain a Supreme Court Judge until the selection 
process produces a candidate that can win a majority of votes 
in the Senate.  Meanwhile, Fretes his filed his own legal 
challenge to his tenure being terminated. 
 
PARAGUAY RANKED AN IMPERFECT DEMOCRACY 
 
¶8. (U) The Economist Magazine recently ranked Paraguay 71 
among 167 countries in its "The World in 2007" Democracy 
report.  Paraguay is ranked in the group of states considered 
to have an "imperfect democracy," including Brasil (42), Peru 
(75), and Bolivia (81).  Paraguay received its lowest scores 
in: Cultural Politics, Political Participation and Government 
Functioning.  Its highest rankings were in Electoral 
Processes and Civil Liberties. 
 
GOVERNMENT REDUCES TIME TO OPEN BUSINESS 
 
¶9. (U) The World Bank,s global survey estimates that it 
takes an entrepreneur a glacial 74 days (on average) to 
register a business in Paraguay.  The Government of Paraguay 
unvieled November 27 a simplified business registration 
system to slice that time in half, and reduce average 
start-up costs to an entrepreneur from an estimated USD 850 
to USD 200.  With assistance provided from the USAID-managed 
MCA Threshold Country program, seven varied government 
institutions, including the Ministry of Industry and 
Commerce, the Supreme Court, and local governments, came 
together and committed three months ago to fix Paraguay,s 
business start-up process.  Paraguay has now put the 
simplified system into operation, and will look for ways to 
reduce time and cut costs even further.  Further reductions 
will require Congressional approval of specific legal 
reforms.  The goal now is to obtain those legal changes and 
drop the registration time down to a blistering fast 9 days. 
Who could possibly object?  Only those currently getting 
 
 
kickbacks from the current system. 
 
LANGUISHING CORRUPTION CASES, AKA IMPUNITY 
 
¶10. (U) The University in Asuncion (UNIDA) released the 
results of a comprehensive analysis of the fate of economic 
crime and corruption cases opened in Paraguay during 
2001-2005.  This study, conducted with USAID support, was the 
first of its kind since Paraguay moved to a new criminal 
procedure system.  Looking in-depth at all 80 economic crime 
cases that reached the accusation or trial stages, the 
analysis revealed extraordinarily long delays at every step 
of the process, which in many instances dramatically exceeded 
timeframes set by law.  A startling 77 percent of the cases 
ultimately just expired under the statute of limitations. 
Wealthy or well-connected defendants often simply play "beat 
the clock," filing motions that simply prevent legal progess 
-- and lead to legalized impunity  Key judicial leaders have 
commented to USAID that the results and the data obtained 
will reinforce efforts to improve efficiency and combat 
corruption in the system. 
 
HIV/AIDS PREVENTION 
 
¶11. (U) The Global Fund for HIV/AIDS, Tuberculosis and 
Malaria recently approved USD 9.1 million in funding for 
Paraguay,s proposal in HIV/AIDS prevention.  The program 
will focus on six regions where the epidemic is concentrated 
or where the potential for fast growth of the epidemic is 
indicated, including places where there is high migration 
to/from neighboring countries (Brazil/Argentina) with higher 
prevalence; an increase in trade, drug use, and/or sexual 
exploitation; or limited access to health services.  Funding 
will be administered by a leading Paraguayan NGO, the Center 
for Investigation in Development (CIRD), a key USAID partner 
in both democracy and public health with a proven track 
record in successfully managing funds to produce expected 
results. 
CASON