This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 000567 
 
SIPDIS 
 
STATE FOR WHA/BSC; NSC FOR KIM BREIER; SOUTHCOM FOR POLAD 
DAN JOHNSON 
 
E.O. 12958: DECL: 02/17/2015 
TAGS: PGOV PREL PHUM ECON PA KICC VZ
SUBJECT: PARAGUAY: FM ON VENEZUELA, MONTGOMERY WATSON 
HARZA, FTAA, OPEN SKIES, MILITARY EXERCISES, UNCHR VOTES, 
ARTICLE 98 
 
REF: A. ASUNCION 0519 
 
     ¶B. ASUNCION 0526 
 
Classified By: Political Chief James P. Merz, reasons 1.4 (b) and (d). 
 
¶1.  (U)  In a 4/21 meeting, FM Rachid and Ambassador 
discussed the assault on Paraguay's Ambassador to Venezuela, 
proper compensation of U.S. firm Montgomery Watson Harza, 
FTAA progress, status of an Open Skies agreement, 
Congressional consideration of privileges and immunities for 
participants in U.S.-Paraguayan military exercises, key UNCHR 
votes, and the status of Article 98 negotiations. 
 
Venezuela's Response to Attack on Paraguayan Ambassador 
--------------------------------------------- ---------- 
 
¶2.  (U)  Ambassador qualified as "ridiculous" comments by 
Venezuela's Ambassador to Paraguay Jose Huerta Castillo 
implying that the U.S. was involved in the attack on 
Paraguay's Ambassador to Venezuela Ana Maria Figueredo on 
4/8.  Rachid agreed.  She suspected that Figueredo had been 
targeted in a bad neighborhood for mere suspicion that she 
was a member of Venezuela's wealthy elite.  Paraguay had 
demanded that Venezuela provide Figueredo with proper 
protection. 
 
Proper Compensation for MWH 
--------------------------- 
 
¶3.  (U)  Montgomery Watson Harza (MWH), a U.S. engineering 
firm, designed and oversaw construction of the Yacyreta Dam 
which is administered by a joint Paraguayan and Argentine 
Binational Entity.  The Binantional Entity has canceled its 
contract with MWH and owes MWH more than USD 1 million for 
work done prior to contract cancellation as well as a 
cancellation fee.  Ambassador noted that GOA Minister Devito 
has agreed to pay MWH but Paraguay's representative Carlos 
Goiburu continues to study the issue.  The U.S. Congress has 
registered interest in the case.  Ambassador requested FM's 
good offices in gaining Paraguayan agreement to proper 
compensation for MWH.  Rachid asked for letters exchanged on 
the case and said she would look into it. 
 
FTAA Negotiations 
----------------- 
 
¶4.  (U)  Ambassador conveyed U.S. views regarding FTAA in 
wake of recent negotiations with Brazil.  Integrating our 
hemisphere economically will help all our people prosper and 
compete more effectively in a global economy.  Rachid offered 
support in principle but nothing concrete regarding next 
steps.  Paraguay has tended to follow Brazil's lead on FTAA 
negotiations. 
 
Open Skies 
---------- 
 
¶5.  (U)  Ambassador stressed the importance the U.S. attached 
to the signing of an Open Skies agreement.  Such an agreement 
would foster greater competition in the airline industry and 
create opportunities for new companies.  Rachid signaled her 
support for an agreement and her understanding that a deal to 
produce an agreement was under consideration.  Note: Since 
the meeting with the FM, the Vice President contacted the 
Ambassador to prepare a May 2nd signing.  End note. 
 
Military Exercises 
------------------ 
 
¶6.  (U)  Ambassador thanked Rachid for expeditious MFA 
movement on the U.S. dipnote seeking diplomatic privileges 
and immunities for U.S. participants in U.S.-Paraguayan 
military exercises over the period extending from 7/2005 
through 12/2006.  The MFA has offered its agreement to the 
terms laid out in our March dipnote.  The Paraguayan Congress 
will review this request over the next several weeks. 
 
Paraguay Supports Key UNCHR Votes 
--------------------------------- 
 
¶7.  (C)  Ambassador applauded Paraguay's decision to support 
the UNCHR Resolution condemning human rights violations in 
Belarus which demonstrated its commitment to human rights. 
Rachid conveyed personal satisfaction in the victory scored 
in defeating Cuba's resolution on Guantanamo particularly 
when juxtaposed with adoption of the U.S. sponsored 
resolution on Cuba. 
Article 98 Negotiations Under Review 
------------------------------------ 
 
¶8.  (C)  Ambassador conveyed disappointment with the GOP 
position adopted in recent negotiations between USG and GOP 
lawyers.  In the wake of Rachid's constructive participation 
in negotiations in Washington in March, we had hoped our 
lawyers could forge meaningful progress.  Instead, Paraguay 
had taken a step backwards reverting to positions we had 
already dismissed as untenable.  Rachid said that she had not 
had a chance to discuss developments with the GOP lawyer but 
expressed her willingness to reenter discussions with 
Washington interlocutors.  Rachid departs for Washington on 
4/28 in order to be present for the 5/2 OAS SYG vote.  She 
was prepared to review U.S. proposals and conveyed 
willingness to explore bringing the GOP's lawyer with her to 
Washington to participate in negotiations.  Notwithstanding 
the Arab Summit 5/9-11 and the Mercosur Summit 6/18-20 she 
expected to be in country and available for negotiations in 
the coming months. 
 
¶9.  (C)  Rachid and her lawyer effectively send contradictory 
signals regarding the GOP's readiness to produce a 
satisfactory Article 98 agreement.  Their joint participation 
in negotiations would be helpful in attempting to determine 
if Paraguay is prepared to negotiate in earnest the concrete 
terms of an agreement.  We request Department provide us with 
its latest proposals emerging from negotiations with Rachid 
and her lawyer with a view to setting up a meeting with both 
of them during her upcoming visit to the U.S. the week of 
5/2. 
 
 
 
 
 
 
 
KEANE