VZCZCXYZ0002
RR RUEHWEB

DE RUEHAC #0768/01 2091515
ZNR UUUUU ZZH
R 281515Z JUL 06
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC 4588
INFO RUCNMER/MERCOSUR COLLECTIVE
RHEHNSC/WHITE HOUSE NSC WASHDC
RUMIAAA/USCINCSO MIAMI FL//SCJ5//
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC

UNCLAS ASUNCION 000768 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/IFD/OIA AND INL - ABBY SMITH 
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 
SQTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL SMIG KCRM PA SP BO
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 22 - 
28 2006 
 
REF: A. ASUNCION 00748 
     ¶B. ASUNCION 00749 AND PRECEDING 
 
¶1. (U) SUMMARY: 
-- Growing Protests in CDE 
-- Couple Accused of Trafficking Children to Spain 
-- IMF Director Compliments Paraguay's Performance 
 
 
----------------------- 
Growing Protests in CDE 
----------------------- 
 
¶2. (SBU) On 7/21, Embassy sources reported that approximately 
600 protesters marched peacefully in Ciudad del Este in a 
demonstration against the Israeli strikes in Lebanon and the 
foreign policy of President Bush.  The protesters included 
members of the National Coordinating Movement of Farmer 
Organizations (MCNOC), the group "Literacy for Adults, Faith 
and Happiness of Concepcion, Chore, and San Pedro of Ykua 
Mandyju" and members of the Lebanese communities of CDE, Foz 
de Iguazu (Brazil), Uruguay, Argentina and other countries. 
 
¶3. (U) On 7/24, local press reported that approximately 3,000 
protesters participated in the Second Social FQm of the 
Tri-Border Area (TBA).  A series of demonstrations that began 
Friday, 7/21 and ended Sunday, 7/23, intended to show support 
for the Lebanese and Palestinian people.  Other themes 
included protest of a purported construction of a military 
base in the TBA, the renewal of US military exercises in 
Paraguay, and debt associated with Itaipu Binacional and 
Yacyreta.  They also addressed issues such as the agrarian 
crisis in Paraguay, the crisis in the universities, 
"Operation Condor in the TBA", and terrorism of the state. 
Protesters included people from more than ten Latin American 
countries, including: Paraguay, Brazil, Argentina, Chile, 
Uruguay, Venezuela, Bolivia, Cuba, Peru, Ecuador and Mexico. 
(Comment: While TBAprotests over the Middle East crisis have 
been peaceful thus far, the Asuncion Jewish community is 
concerned for its safety and has increased security (Ref. A). 
RSO and Post continue to monitor the situation.  End Comment.) 
 
--------------------------------------------- -- 
Couple Accused of Trafficking Children to Spain 
--------------------------------------------- -- 
 
¶4. (U) On 7/27, Claudia Lorena Martinez and Andres Eligio 
Ponce, both of Spanish descent, were detained for trafficking 
children to Spain and possibly selling internal organs as 
well. Martinez and Ponce were previously involved in a case 
of falsified passports, which resulted in a warrant for 
Ponce's arrest in 2005.  Ponce was in prison in Tacumbu, but 
has since been moved to the prison in Emboscada. Since the 
mothers of both Martinez and Ponce are Spanish, the couple 
did not have trouble entering Spain with the children, whom 
they took to Spain to be adopted for a price of USD 6,000 to 
10,000 per child.  Prosecutor Cristina Avalon recovered 
public health and civil registry documents which indicated 
that the biological mother of the girls who were rescued is 
Claudia Martinez herself, although two different names of a 
biological father appeared on different copies of the 
documents.  The investigation is ongoing to determine whether 
the couple was involved in the trafficking of organs as well. 
 
--------------------------------------------- -- 
IMF Director Compliments Paraguay's Performance 
--------------------------------------------- -- 
 
¶5. (U) An IMF staff mission is in Paraguay to begin the first 
review of Paraguay,s new IMF program.  According to press 
reports, Mission Chief Alejandro Santos indicated that while 
time is needed for more precise conclusions and exact 
figures, he said that the GOP appears to be on track to meet 
the program,s near-term targets.  Santos commented favorable 
on the Central Bank,s ability to rein in inflation in the 
second quarter.  IMF staff and the Finance Ministry are now 
 
looking to identify problem areas and develop compensation 
plans for the rest of the year.  Vice Minister Jorge von 
Horoch emphasized the importance of public investment and the 
need to differentiate between quality and quantity of 
expenses.  Program goals for 2006 include an inflation rate 
between 2.5 percent and 7.5 percent, a balanced budget, and 
public investments accounting for 4.5 percent of GDP. 
Details of plans for private sector participation in 
State-owned enterprises remain to be developed. 
CASON