VZCZCXYZ0010
OO RUEHWEB

DE RUEHAC #0450/01 1972103
ZNR UUUUU ZZH
O 162103Z JUL 09
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7990
INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RUEAWJB/DEPT OF JUSTICE WASHDC

UNCLAS ASUNCION 000450 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR WHA/BSC MDASHBACH, BFRIEDMAN, MDRUCKER, AND 
WHA/FO CMCMULLEN 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL PA
SUBJECT: PRESIDENT LUGO'S STATE OF THE UNION 
 
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SUMMARY 
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¶1.  (SBU) President Fernando Lugo gave his state of the union 
address July 1 to the Paraguayan Congress.  Lugo repeated that 
Paraguay will maintain diplomatic relations with all countries that 
want to cooperate with Paraguay.  He highlighted his social 
programs, such as cash subsidies to the poor, land for poor 
peasants, and free health services as his government's most 
successful initiatives.  Lugo promised to respect private property; 
however, he said that the general well-being of the population as a 
whole should prevail over the interests of a few.  Lugo said the 
fight against corruption is one of his government's top priorities. 
To mitigate effects of the global financial crisis, Lugo said that 
his government implemented a medium-term strategy centered on job 
creation through public works and credits to the private sector. 
Formalizing the economy, stopping contraband and ending tax evasion 
are some of his top economic goals.  Lugo said that his government 
has intensified the fight against drug production, transit and 
trafficking.  Lugo's report on his ten-month old government centered 
on his government platform rather than on concrete accomplishments, 
resembling his August '08 inauguration speech.  END SUMMARY. 
 
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LUGO'S USUAL TENETS: HIS POLITICAL PLATFORM 
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¶2.  (U) President Fernando Lugo gave his state of the union address 
July 1 to the Paraguayan Congress.  Lugo repeated his usual tenets 
that his government will firmly defend freedom of expression and of 
the press; promote social justice; renegotiate the Itaipu and 
Yacyreta Dam treaties; defend Paraguay's territorial sovereignty; 
and assist the indigenous people.  Lugo said his government 
emphasized: a) reactivation of the economy with generation of jobs 
and spending on social welfare; b) promotion of a national agrarian 
reform; c) reform of state institutions and anti-corruption; d) 
judicial reform; e) recuperation of national sovereignty; and f) 
institution of a national social emergency program.  President Lugo 
asked the political sectors to work with him on these issues and to 
place Paraguay on a better path for development. 
¶3.  (U) Lugo repeated that Paraguay will maintain diplomatic 
relations with all countries that want to cooperate with Paraguay. 
He said that the Cold War phantoms -- angels and devils -- are not 
compatible with Paraguay's foreign policy objectives.  He said that 
Paraguay will not follow any government model but will create its 
own model aimed at solving Paraguay's problems.  Lugo said 
Paraguay's foreign policy themes are recuperation of Paraguay's 
national sovereignty, Latin American integration, and establishment 
of an international multi-polar system as a tool for equilibrium and 
respect.  He said that Paraguay will work to strengthen bilateral 
and multilateral diplomatic relations with all countries and will 
pursue new and strengthen existing bilateral and multilateral 
agreements, especially URUPABOL, UNASUR, ALADI, and the South 
American Defense Council. 
 
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SOCIAL PROGRAMS: LUGO'S BIGGEST SUCCESSES 
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¶4.  (U) Lugo highlighted his social programs, such as cash subsidies 
to the poor, land for poor peasants, and free health services as his 
government's most successful initiatives.  Lugo pointed out that his 
government concentrated on social programs, such as helping the poor 
peasants and working-class organizations to close the wealth gap and 
to achieve social changes.  The process of change, according to 
Lugo, will necessarily include a frontal fight against the "cancer 
of corruption," modernization of the state, and improved efficiency 
in the public sector.  President Lugo talked about education with 
emphasis on social actions to "decrease economic factors that 
produce structural poverty."  Lugo said that he wanted a "Paraguay 
in which everyone can grow."  He emphasized that he will govern on 
behalf of the "have-nots," to give them land, housing, health care, 
education and public assistance to allow them to live with dignity. 
 
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RESPECTING PRIVATE PROPERTY 
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¶5.  (U) Lugo promised to respect private property; however, he said 
that the general well-being of the population as a whole should 
prevail over the interests of a few.  He said that despite 
opposition from the oligarchy and privileged elite, his 
administration will pursue agrarian reform and "apply without 
restrictions the principle of private property's social functions." 
He said agrarian reform is an irrefutable government plan.  Lugo 
said that the poor conditions in which the peasants live are due to 
poor distribution of the land.  Since August '08, his government has 
distributed 94.4 thousand hectares of land to six thousand families 
and another 99.7 thousand acres will be given to landless peasants 
in the next few months. 
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FRONTAL FIGHT AGAINST CORRUPTION 
-------------------------------- 
 
¶6.  (U) Lugo said that fight against corruption is one of his 
government's top priorities.  His administration is working to 
strengthen institutions by making them more transparent, efficient, 
and accountable and by improving workers' professionalism and 
skills.  Lugo indicated that his administration emphasizes austerity 
and control of public goods to prevent abuses and illicit 
acquisition and ostentation of wealth by politicians in government 
while the grand majority suffers in poverty. 
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FIXING THE ELECTRICITY PARADOX 
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¶7.  (U) Lugo said that his government will remedy Paraguay's paradox 
as the biggest producer of electricity in South America but that 
suffers chronic energy shortages.  The President said that for the 
first time in 35 years, Paraguayan officials seek to regain "energy 
sovereignty" from Brazil and Argentina, with which it shares 
ownership of the two bi-national electric dams -- Itaipu and 
Yacyreta.  Lugo said his administration's biggest success is to 
convince Brazilian authorities to agree to negotiate Itaipu's 
administration and the price of electricity.  Lugo's government will 
continue insisting Argentina and Brazil renegotiate the terms of the 
two dam treaties. 
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STRATEGY TO MITIGATE ECONOMIC CRISIS AND 
ECONOMIC REACTIVATION 
-------------------------------------------- 
 
¶8.  (U) To mitigate effects of the global financial crisis, Lugo 
said that his government implemented a medium-term strategy centered 
on job creation through public works and credits to the private 
sector.  Lugo said that in an attempt to create jobs, the Ministry 
of Public Works spent USD 100 million paving 1,500 kilometers of new 
roads and repaving 350 kilometers of existing roads and building 
bridges.  To reactivate the economy, Lugo pointed out that his 
administration is negotiating international credits and loans from 
various multilateral institutions, such as the World Bank and the 
Inter-American Development Bank. 
¶9.  (U) Formalizing the economy, stopping contraband and ending tax 
evasion are some of his top economic goals.  He said that economic 
growth should be for all and not for a few who "benefit from the 
sweat and deprivation of others."  Lugo said that his government 
places great emphasis on helping the poor, which, Lugo said 
comprises forty percent of the population (twenty percent live in 
extreme poverty).  Lugo emphasized that the only way Paraguay will 
emerge from developing country status is through ethical and 
dignified work based on fair wages. 
 
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FIGHTING DRUG, PRODUCTION, TRANSIT AND TRAFFICKING 
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¶10.  (U) Lugo said that his government has intensified the fight 
against drug production, transit and trafficking.  Lugo emphasized 
that Paraguay's antinarcotics secretariat (SENAD) conducted 
important operations in coordination with international 
organizations to combat illegal drug trafficking and to dismantle 
international drug trafficking organizations.  In ten months, SENAD 
seized 201.4 kilograms of cocaine, 64 tons of marijuana and 2.5 
thousand kilograms of crack and destroyed 836 hectares of marijuana, 
in total representing USD 28 million in seizures, which is ten times 
SENAD's annual budget. 
 
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COMMENT 
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¶11.  (SBU) Lugo's report on his ten-month old government centered on 
his government platform rather than on concrete accomplishments, 
resembling more his August '08 inauguration speech.  While critics 
say Lugo has little to show in terms of results, he did a very 
thorough review of his governments small successes to date, as well 
as its challenges.  Much of the press coverage, however, was 
somewhat negative, showing several members of Congress dozing off 
during Lugo's two-hour long speech. END COMMENT.