VZCZCXYZ0000
PP RUEHWEB

DE RUEHAC #0766/01 2081657
ZNY CCCCC ZZH
P 271657Z JUL 06
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC PRIORITY 4582
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0321
RUEHUB/USINT HAVANA 0157
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/WHITE HOUSE NSC WASHDC
RUEKJCS/USSOCOM WO WASHDC

C O N F I D E N T I A L ASUNCION 000766 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC, WHA/EPSC, EB/IFD/OMA 
TREASURY FOR OSIA AND OTA 
STATE PASS USTR FOR MARY SULLIVAN 
USAID FOR AA/LAC ADOLFO FRANCO 
NSC FOR SUE CRONIN 
SOUTHCOM FOR POLAD BARBARA MOORE 
 
E.O. 12958: DECL: 07/27/2016 
TAGS: ECON ETRD PREL PINR MARR PGOV XR VE PA
SUBJECT: PARAGUAY: AMBASSADOR MEETS WITH FOREIGN MINISTER 
ON MERCOSUR, VENEZUELA, BILATERAL RELATIONS, CUBAN REFUGEES 
 
REF: ASUNCION 495 
 
Classified By: Classified By: ECON Patrick R. O'Reilly for reasons 1.4 
(b) and (d). 
 
-------------------------- 
Summary and Action Request 
-------------------------- 
 
¶1. (C) In a July 24 meeting with Foreign Minister Rachid, the 
Ambassador expressed concern over Mercosur,s apparent 
ideological shift.  Rachid agreed, and placed great hope that 
Mexico will join as an associate member to bring needed 
&responsibility8 to the bloc, although she credited Lula 
with being level-headed and reining in Chavez to a certain 
extent.  She downplayed GOP calls for Venezuela to purchase 
Itaipu debt and requests for flexibility to negotiate outside 
the bloc as merely ways to get Brazil and Argentina to pay 
attention. 
 
¶2. (C) ACTION REQUEST: Minister Rachid reiterated several 
times her strong desire to visit Washington shortly and speak 
with A/S Shannon, in large part to assure him that 
&everything is okay between our countries.8  Post supports 
Rachid,s request for senior level appointments in 
Washington.  Appointments with S or D or P, if scheduling 
allowed, would strengthen Paraguay,s hand vis--vis the rest 
of Mercosur, and should be considered. 
 
¶3. (C) Rachid told the Ambassador that there were no domestic 
legal impediments to accepting Guantanamo refugees, although 
she noted that it could be done &in silence8 suggesting 
that the GOP is reluctant to publicly accept refugees. 
Rachid suggested that the Ambassador raise it again with 
President Duarte.  The Ambassador presented three conditions 
for continued counterterrorism exercises in Paraguay, and 
urged the GOP to move quickly (by September first) to approve 
the diplomatic note needed to provide appropriate legal 
protections for the exercises.  Rachid promised to contact 
the Defense Minister immediately.  The Ambassador urge the 
GOP to fully implement the GOP,s new visa policy for 
Americans and to work toward the repeal the six percent 
commission on airline tickets enacted last December.  He also 
delivered reftel demarches.  End Summary and Action Request. 
 
¶4. (C) The Ambassador and Econcouns met with Foreign Minister 
Leila Rachid and Director General of Bilateral Policy 
Ceferino Valdez on July 24 to discuss a wide range of issues. 
 Rachid was freshly returned from the Mercosur Summit and 
while receptive to the subjects raised by the Ambassador, was 
especially eager to express her desire to meet with WHA A/S 
Shannon in the near future. 
 
-------------------------------- 
SEEKING MEETING WITH A/S SHANNON 
-------------------------------- 
 
¶5. (C) Minister Rachid reiterated several times her strong 
desire to visit Washington shortly and speak with A/S 
Shannon, in large part to assure him that &everything is 
okay between our countries.8  While in Washington, she said 
she would also wish to visit with USTR to discuss our request 
for waivers in the WTO.  She mentioned that she would be 
traveling with the President to Colombia around August 8, and 
could visit Washington around that time, although she 
expressed willingness to work around any dates we propose. 
Comment: Rachid,s reiterated her request at least three 
times, and appeared genuinely concerned that a face-to-face 
meeting was necessary to personally deliver the message that 
Paraguay remains a friend of the United States and does not 
subscribe to all that his happening in Mercosur.  Post 
supports her request and believes such a meeting would be 
beneficial.  Rachid has expressed interest in a strong 
program in 2007 to commemorate the 40th anniversary of the 
Peace Corps, and she might decide to use a meeting there as 
the public justification for a Washington visit.  End 
comment. 
 
 
--------------------------------------------- - 
MERCOSUR RELATIONS ) SEEKING ADULT SUPERVISION 
--------------------------------------------- - 
 
¶6. (C) The Ambassador opened by asking her opinion of the 
recently concluded Mercosur Summit in Cordoba, Argentina, and 
expressed concern that Mercosur appeared to be taking on a 
particular ideology given the actions of Hugo Chavez and 
Fidel Castro.  Rachid said she shared our concern, and told 
the Ambassador that President Duarte also has concerns and is 
firmly opposed to Mercosur becoming an outlet for a 
particular ideology.  She emphasized the Paraguay is an enemy 
of no one, including the PRC, despite the fact that they 
recognize Taiwan.  Rachid said she believed that Brazil,s 
President Lula was fairly level headed and recognized the 
danger Venezuela posed.  She told the Ambassador that Lula 
often tells Chavez that he must be patient, and not always 
seek to make sweeping changes.  Rachid expressed hope that 
the US could talk to Brazil and encourage them to rein in 
Chavez with respect to Mercosur. 
 
------------------------------ 
MEXICO TO ADD &RESPONSIBILITY8 
------------------------------ 
 
¶7. (C) Rachid emphasized the importance Paraguay places on 
Mexico,s formal request for Associate Member status, and 
commented that she was planned to visit Mexican Foreign 
Minister Derbez to fill him in on everything he needs to 
know.  She viewed Mexico,s entry with some urgency, hoping 
it would be completed during Brazil,s term as President Pro 
Tempore of Mercosur to bring &more responsibility8 to the 
bloc, otherwise, Paraguay would be &very exposed.8  Rachid 
reiterated that Paraguay is firmly against an ideological 
shift of Mercosur and did not want the bloc to become a 
&club of lunatics.8 
 
¶8. (C) The Ambassador noted that Chavez chooses to visit the 
worst regimes in the world, such as North Korea, Belarus and 
Iran, and has significant resources with which to buy 
loyalty.  He said he hoped Paraguay would choose the way 
forward wisely.  Rachid seemed to agree, commenting on &what 
a cancer we have8 and suggesting that Bolivia,s constituent 
assembly was part of Chavez,s designs.  She also criticized 
Argentine President Kirchner for his conduct at the Cordoba 
Summit.  She noted that Lula did not attend his dinner and 
complained that Kirchner had conducted himself in Cordoba in 
a similarly negative way to Mar del Plata. 
 
---------------------------- 
OVERTURES TO CHAVEZ FOR SHOW 
---------------------------- 
 
¶9. (C) In response to the Ambassador,s question on the 
success of Paraguay,s request for flexibility in the bloc, 
Rachid shook her head and said &nada, nada, nada.8  She 
avoided discussing the specifics of what Paraguay had 
proposed to Mercosur, but complained that Paraguay had 
obtained no concrete benefits from the Summit.  The 
Ambassador asked Rachid about Paraguay,s suggestion that 
Venezuela purchase Itaipu debt to reduce what Paraguay 
considers spurious interest that the binational entity pays 
to the Brazilian Treasury and to Brazilian electric company 
Electrobras.  Rachid scoffed at the idea of granting 
Venezuela any control over the Itaipu dam and plainly stated 
that there was nothing to it other than an attempt to get 
Brazil,s attention. 
 
--------------------------------------- 
GUANTANAMO REFUGEES ) ASK THE PRESIDENT 
--------------------------------------- 
 
¶10. (C) The Ambassador asked Rachid if the GOP has reached a 
decision yet on accepting UN-designated refugees from 
Guantanamo (he had previously raised the issue with both the 
President and Rachid).  He suggested that accepting refugees 
 
would be a good way to demonstrate independence in the 
Mercosur context, and noted that even the Cuban government 
does not oppose the resettlement.  Rachid agreed, but 
deferred to the President, saying she had recently reminded 
him that an answer was pending.  She told the Ambassador that 
there were no domestic legal impediments to accepting 
refugees, although she noted that it could be done &in 
silence8 suggesting that the GOP is reluctant to publicly 
accept refugees.  Rachid suggested that the Ambassador raise 
it again with President Duarte. 
 
------------------ 
MILITARY EXERCISES 
------------------ 
 
¶11. (C) Pointing out recent public lies by the opposition 
against US military exercises in Paraguay, the Ambassador 
urged the GOP to speak out in the future to counter such 
disinformation.  He also told Rachid that the possibility 
existed that future exercises could include engineering work 
such as digging wells or building clinics.  However, the GOP 
and then the Congress must approve the diplomatic note the 
Embassy recently submitted.  Rachid agreed that the GOP 
should do more to counter disinformation, and said that Hugo 
Chavez himself accused the US during a Mercosur Summit 
meeting of having military designs on the tri-border region 
in order to control the large Guarani fresh water aquifer. 
 
¶12. (C) The Ambassador told Rachid that we were wanted to 
continue with counter-terrorism training, but that we had 
three conditions to do so: 1) the replacement of the Colonel 
in charge of the unit; 2) keeping the unit together and 
ending the practice of transferring trained soldiers to 
unrelated duty; and 3) buying the basic equipment needed to 
equip the unit.  He added that President Duarte had already 
received information on the details.  The Ambassador told 
Rachid that the GOP had until September 1 to approve the 
diplomatic note, or Paraguay would simply lose the 
opportunity as we would send the exercises elsewhere.  Rachid 
promised to contact the Defense Minister immediately, and 
said that the Ministry of Foreign Affairs had already 
approved the note and sent it to Defense. 
 
----------------------------------------- 
VISAS FOR AMERICANS and AMERICAN AIRLINES 
----------------------------------------- 
 
¶13. (C) After the Ambassador raised Paraguay,s visa issuance 
policy for American citizens, Valdez assured the Ambassador 
that the Paraguayan Embassy and Consulates in the US had 
implemented the new visa policy of issuing multiple entry 
visas valid until the expiration of the US passport, and that 
the websites had been updated.  The Ambassador reiterated our 
message that making visa issuance flexible for Amcits is in 
Paraguay,s interest, and suggested that the GOP consider a 
mechanism to issue visas at ports of entry.  He suggested 
that we understood that improved visa issuance and the repeal 
of the legislated six percent commissions on the sale of 
airline tickets could lead to a decision by American Airlines 
to return to the market.  Rachid agreed that the six percent 
commission requirement was bad policy.  She expressed concern 
that, politically, facilitating visa requirements would have 
to be done in a general way, and not just for Americans. 
 
--------------- 
GSP HANDICRAFTS 
--------------- 
 
¶14. (C) The Ambassador presented Rachid with a copy of a 
briefing paper describing in detail Handicrafts agreements 
possible under the Generalized System of Preferences (GSP). 
Rachid said she was aware of the agreements and had tried to 
raise interest in Paraguay while she was the Paraguayan 
Ambassador in Washington, but without success.  She thanked 
the Ambassador and said she would pass on the information to 
the Paraguayan Handicrafts Institute, which is part of the 
Ministry of Industry and Commerce. 
 
 
-------------------------------- 
IRAN AND WTO DEMARCHES DELIVERED 
-------------------------------- 
 
¶15. (U) Ambassador delivered ref A and B demarches and 
non-papers.  Rachid had no comment but promised to study them. 
 
------- 
COMMENT 
------- 
 
¶16. (C) Rachid was clear about trying to position Paraguay as 
a reasonable voice within Mercosur, and she wants to 
communicate that message personally to Washington.  This may 
be a good opportunity to press forward US interests as 
Paraguay seeks to express its independence.  Rachid,s 
comments on Mercosur were consistent with public comments 
President Duarte has made about the importance Paraguay 
places on Mercosur.  Rachid was clear that recent overtures 
to Venezuela and moves to seek the flexibility to negotiate 
outside agreements are merely tactics to extract concessions 
from Brazil and Argentina rather than serious initiatives. 
President Duarte has told the Ambassador, though, that he 
would &deal with the devil if it would help his country.8 
We will monitor closely how Paraguay reacts to Chavez,s 
various approaches to Paraguay promising resources.  Post 
supports Rachid,s request for senior level appointments in 
Washington.  Appointments with S or D or P, if scheduling 
allowed, would strengthen Paraguay,s hand vis--vis the rest 
of Mercosur, and should be considered. 
 
CASON# 
CASON