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S E C R E T ASUNCION 001020 
 
SIPDIS 
 
SIPDIS 
 
NSC FOR SUE CRONIN 
SOUTHCOM FOR POLAD 
 
E.O. 12958: DECL: 10/03/2026 
TAGS: PREL MASS KICCPUR PTER PINR BR VZ AR PA
SUBJECT: PARAGUAY REJECTS IMMUNITIES FOR U.S. MILITARY 
EXERCISES 
 
REF: A. ASUNCION 915 
     ¶B. STATE 141911 
 
Classified By: PolCouns James P. Merz; Reasons 1.4(b),(d) 
 
¶1.  (C)  SUMMARY.  FM Ruben Ramirez confirmed October 2 press 
reports that Paraguay had decided to reject A&T status for 
U.S. participants in military exercises proposed for 2007. 
He told the Ambassador that the decision had been made on the 
basis of legal and political considerations.  The Ambassador 
pointed out that Paraguay extends to Argentina and Brazil the 
same kinds of protections we seek.  He also noted that a 
number of countries throughout South America extend the U.S. 
these protections.  We made it clear we were prepared to be 
flexible in exploring a formula to continue the exercise and 
retain the protections, including possibly working off the 
Brazilian agreement as a model.  Ramirez signaled interest in 
trying to find a way to continue military cooperation on 
mutually acceptable terms but needed to consult with the 
President regarding viable options.  Meanwhile, an advisor to 
the Vice-President (strictly protect) told the Ambassador 
that Argentina had offered Paraguay $4.5 billion in debt 
relief, among other things, if it ended military exercises 
with the U.S.  END SUMMARY. 
 
Who Said What and When? 
---------------------------------------- 
¶2.  (C)  Left of center newspaper Ultima Hora published an 
article October 2 reporting former FM Rachid had told A/S 
Shannon in August, on instructions from President Duarte, 
that Paraguay had decided to reject extending immunities to 
U.S. participants in military exercises proposed in 2007. 
(NOTE: The MFA has been reviewing since July a draft 
agreement that we sent them that would extend A&T status 
consistent with the Vienna Convention to U.S. participants in 
military exercises proposed for 2007.  END NOTE.)  The 
article also reported that Shannon informed Rachid that the 
U.S. would not be able to continue the exercises without the 
protections.  Subsequently, FM Ramirez confirmed publicly 
that Paraguay had taken this decision based on its conclusion 
that the Vienna Convention precluded extending privileges to 
anyone other than diplomats and that Paraguay was the only 
country in the region that extended such protections to U.S. 
participants in military exercises.   He insisted Paraguay 
was committed to maintaining strong relations with the U.S. 
 
¶3.  (C)  Per Department's report (ref B) on Rachid's meeting 
with A/S Shannon on August 18, Rachid sought U.S. flexibility 
on the question of immunities but at no point asserted 
Paraguay had decided to reject diplomatic immunities. 
Subsequent to the Rachid's U.S. visit, the Ambassador met 
with President Duarte September 4 (ref A) making the case for 
the exercises and defending the language on immunities. 
Duarte never advised the Ambassador he had already decided to 
reject the immunities.  To the contrary, he agreed to support 
the exercises and said he would rally Colorado congressmen in 
an effort to meet the Ambassador's 20 day deadline for moving 
forward.   On repeated occasion, MFA U/S for Bilateral 
Affairs Ceferino Valdez told PolCouns FM needed to consult 
with the President on next steps for how to draft language in 
our agreement on immunities.  He never suggested nor implied 
that the MFA had already decided to reject immunities. 
 
Where Do We Go From Here? 
------------------------------------------- 
¶4.  (C)  FM Ramirez told the Ambassador October 3 that 
Paraguay had decided to reject extending immunities to 
participants in military exercises on legal and political 
grounds.  First, he maintained the Vienna Convention 
precluded the extension of A&T status to participants in 
military exercises.  Second, he asserted the proposed 
agreement would not pass in the opposition controlled 
Congress.  The Ambassador roundly debunked both points.  He 
pointed out that the U.S. had Status of Force Agreements with 
some 80 countries around the world, including many in Central 
and South America.  Further, Paraguay extended A&T status to 
Argentina and Brazil in the context of agreements on military 
cooperation it signed with those countries originally in 
¶1995.   On the question of political support for the 
agreement, he informed the Foreign Minister that we had 
lobbied the opposition and were confident there was 
sufficient support to adopt the agreement. 
 
¶5.  (C)  The Ambassador made it clear the U.S. is committed 
to continued military cooperation with Paraguay.  President 
 
Bush had just signed off on an APSA waiver that would allow 
the U.S. to reextend IMET to Paraguay; an ESF waiver for 
Paraguay was also in the works and Congress had approved $1.1 
in PKO support funds.  On our military cooperation agreement, 
we were prepared to be flexible on the framework including 
working off the Brazilian agreement as a model.  We could 
also look at attaching participants to the our Mission in 
Paraguay.  However, we needed to know if the GOP had the 
political will to look for a solution or if had decided to 
kowtow to its neighbors pressuring it to cut back on military 
ties to the U.S.  Ramirez signaled he would like military 
cooperation to continue but would need to consult with 
President Duarte to see if it would be possible to overcome 
the government's announced predisposition against extending 
immunities.  The external pressures on Paraguay, he 
suggested, were enormous. 
 
The $4.5 Billion Dollar Answer? 
--------------------------------------------- 
¶6.  (S)  Vice-Presidential advisor Juan Facetti (strictly 
protect) told the Ambassador seperately the same day that 
President Duarte's decision on the exercises flowed from 
Argentine pressure.  According to Facetti, Argentine 
President Kirschner met with Duarte in September at the UNGA 
in New York and offered Paraguay $4.5 billion in debt relief, 
among other conditions, if Paraguay agreed to end its 
military cooperation with the U.S.  Argentina, said Facetti, 
was explicitly behind this in coordination with the 
government of Venezuela.  (NOTE:  Paraguay is seeking to 
renogiate the terms of debt, extending through to 2023, 
associated with construction of the Yacyreta Hydroelectric 
Dam.)   Facetti believed this offer had compelled Duarte to 
reject continued U.S. military cooperation and maintained the 
President's office was the source for the leak leading to the 
recent press reports on this issue.  It is worth noting FM 
Ramirez cut short his stay in New York in September during 
the UNGA, including canceling a meeting with A/S Shannon, on 
the pretext he needed to prepare for negotiations with 
Argentina the following week. 
 
Mixed Political Response 
------------------------------------ 
¶7.  (C)  Several leftist opposition Congressmen opposed to 
any military exercises with the U.S. applauded the 
announcement charging the language on protections had 
represented an affront to Paraguay's sovereignty.  However, 
several key opposition Senators including Sen. Miguel 
Saguier, President of the Senate Defense and Constitutional 
Affairs Commission, and Carlos Mateo Balmelli, a candidate 
for President in 2008, criticized Duarte for bowing to 
pressure from his neighbors in the region.  If nothing else, 
their public criticism put to the lie the notion the 
opposition would categorically reject the exercises with the 
U.S. 
 
 
COMMENT 
---------------- 
 ¶8.  (S)  We may never know exactly when Duarte took his 
decision to reject extending immunities and why.  The notion 
that Argentina offered a compelling financial incentive in 
September at the UNGA is conceivable but doesn't square 
entirely with the suggestion Rachid had been sent to give us 
the President's decision back in August.  We have no doubt 
Paraguay is under pressure from its neighbors to cut back on 
military cooperation with the U.S.  Brazil is seeking to 
expand its own military assistance with Paraguay.  Meanwhile, 
Venezuela has signed agreements with Paraguay extending 
concessional terms on fuel sales. 
 
¶9.  (C)  We have conveyed our readiness to be flexible in 
exploring a mutually satisfactory solution that will afford 
the protections we need.  The MFA has conveyed a desire to 
continue cooperation and we know that sentiment is genuinely 
shared by Vice-President Castiglioni and the Armed Forces. 
However, it will be difficult for Duarte to climb down from 
his public stance of rejecting the extension of immunities 
tied to the exercises particularly in the face of pressure 
from his neighbors.  An interesting dynamic that may bode in 
our favor is the fact that the five-year duration Brazilian 
and Argentinan agreements are coming up for renewal this 
month.  Duarte's government will be hard-pressed to explain 
publicly how it can extend the same protections to Brazil and 
Argentina that it found unacceptable in the U.S. draft 
agreement.  This could potenially create an opening for U.S. 
 
supporters to argue the U.S. be afforded comparable 
protections. 
CASON