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DE RUEHAC #0701/01 1911401
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R 101401Z JUL 06
FM AMEMBASSY ASUNCION
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UNCLAS ASUNCION 000701 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC AND EB/IFD/OIA 
STATE PASS TO USAID FOR LAC/AA 
STATE PASS TO USTR FOR LYANG 
NSC FOR SUE CRONIN 
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 SMIG KWMN KCRM PA SP
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 1 - 7 
2006 
 
 
 ¶1. (U) SUMMARY: 
-- National Indigenous Movement 
-- Sexual Harassment in Military Academy 
-- 1,500 Paraguayan Prostitutes in Spain 
-- Fiscal Adjustment Law Effects Positive on Economy 
-- Drug Judge Talks with Ambassador about Safety 
 
 
---------------------------- 
National Indigenous Movement 
---------------------------- 
 
¶2. (U) On 6/30, leaders from Paraguay's ten indigenous 
nations announced the founding of a National Indigenous 
Movement. The goal is to demand their rights and work towards 
gaining representation in Congress. The leaders hope to 
present a candidate in the next general elections. They feel 
it is especially important to have indigenous representation 
within the legislative branch because politicians from other 
parties have made offers to the communities during election 
times but failed to produce any significant improvement once 
in office. The indigenous people feel ignored by the 
government and do not have real access to the political 
system or other public services such as health care and 
education. The first convention of the new movement is 
scheduled for September 2006. According to the 2002 census, 
the indigenous population is 87,099, which represents 1.7 
percent of the country's population. 
 
¶3. (U) Comment: Local human rights activists and 
international organizations confirm that indigenous groups do 
not have good access to the political system, and that 
government officials have generally neglected their needs as 
their living conditions continue to deteriorate. In the 
department of Boqueron in the Chaco where the indigenous are 
most highly concentrated, the groups are well organized and 
have gained government representation and funding on a local 
level. There is a federation in the Chaco that incorporates 
several of the country's 20 indigenous ethnicities. Experts 
describe it as well organized though it comprises less than 
80 percent of the indigenous population. The Paraguayan 
Institute of Indigenous People (INDI) is the only institution 
for indigenous people that receives limited funding from the 
government. The indigenous groups do not enjoy direct 
representation in the INDI; the president of the INDI is 
appointed by the president of the country. 
 
------------------------------------- 
Sexual Harassment in Military Academy 
------------------------------------- 
 
¶4. (U) On 7/4, opposition senators complained to President 
Duarte about the lack of action in cases involving the sexual 
harassment of several women in the Mariscal Francisco Solano 
Lopez Military Academy (Academil). On 5/2, senators had gone 
to the Academy to hear the testimony of several female cadets 
at the academy who said they had been sexually assaulted by 
their superiors. One woman was reportedly expelled for having 
an abortion. Senator Ana Maria Mendoza de Acha of the Beloved 
Fatherland Party (PPQ) noted that two months had passed since 
ten cases were confirmed and the director of the school, Col. 
Ramon Brozzon Bareiro, had been called before the Human 
Rights commission to address this matter. Yet still no action 
had been taken. 
 
-------------------------------------- 
1,500 Paraguayan Prostitutes in Spain 
-------------------------------------- 
 
¶6. (U) On 7/5, Gustavo Gomez Comas, the Chief of Paraguay's 
Mission in Spain, announced there are 1,500 Paraguayan 
prostitutes in Spain. He maintained that the Paraguayan 
Embassy in Spain cannot intervene if the woman is not a minor 
and is working according to her free will. Gomez Comas noted 
that there are approximately 50,000 Paraguayans living in 
Spain, half of whom do not have the proper legal documents. 
According to Vice Foreign Minister Luis Morinigo 1,105 
 
 
Paraguayans were either deported, detained, or expelled from 
Spain from January to June 2006. That sum includes 650 that 
were not admitted to the country and deported, 223 that were 
detained, and 232 that were expelled from the country. 
 
--------------------------------------------- ---- 
Fiscal Adjustment Law Effects Positive on Economy 
--------------------------------------------- ---- 
 
¶7. (U) Paraguay's Fiscal Adjustment Law, passed in 2005, 
created a personal income tax which became effective for the 
first time this year. The law and its implementation by the 
tax administration are having a measurable effect on tax 
compliance and formalization of the Paraguayan economy. The 
number of registered contributors has been consistently 
growing since 2002. Growth continues to accelerate with 
39,000 new contributors registered in the first six months of 
this year, an 11.9 percent increase in registration.  A large 
percentage of new registrants were previously in the informal 
sector.  The income tax allows for the deduction of virtually 
all spending and was designed mainly as an incentive for 
taxpayers to demand legal receipts for their purchases, which 
in turn compels businesses to request legal receipts from 
their suppliers to reduce their own tax burden, leading to 
much higher levels of formal activity.  The legal receipts 
are issued in numbered pads that can be easily audited by the 
tax authorities.  The Finance Ministry reports a 19.9 percent 
increase in taxes collected in the first half of 2006 
compared with the same period of last year and the amount 
collected exceeds the total collected in all of 2002. 
 
--------------------------------------------- 
Drug Judge Talks with Ambassador about Safety 
--------------------------------------------- 
 
¶8. (U) On 7/7, Alba Ma. Gonzalez Rolon, the judge who will 
hear the drug case of Arnaldo Moreira de Macedo, talked to 
the Ambassador in the office of Senator Armando Espinola, of 
the Authentic Radical Liberal Party (PLRA), regarding her 
concerns about her safety and that of her family.  She 
indicated that she has already received threats.  The case is 
expected to be adjudicated in October 2006.  The Ambassador 
conveyed U.S. Embassy support for her efforts and stressed 
the importance we attach to a just rendering of this case. 
(NOTE: Macedo is an associate of Ivan Mendez Mesquita, who 
was extradited to the U.S. in June 2005.  End Note.) 
CASON