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DE RUEHAC #0451/01 1551540
ZNR UUUUU ZZH
R 041540Z JUN 07
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC 5803
INFO RUCNMER/MERCOSUR COLLECTIVE
RUMIAAA/USCINCSO MIAMI FL//SCJ3/SCJ33/SCJ34/SOCSO LNO//
RHEHNSC/WHITE HOUSE NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC

UNCLAS ASUNCION 000451 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC, INL/LP (JIM HIDES) 
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 MASS MOPS
SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE MAY 26 - 
JUNE 1, 2007 
 
 
¶1. SUMMARY: 
 
-- TIP Consultant Quits Amid Threats 
-- Second Peacekeeping Force Deploys 
-- Director of Intellectual Property Leaving Post 
-- Civil Society Input for MCA 
-- Supporting Transparency in Local Leadership 
-- Support for Ethics Code Grows 
-- Court Backs Tax Compliance 
 
 
TIP CONSULTANT QUITS; THREATS TO FAMILY 
 
¶2. (SBU) Cynthia Bendlin, a TIP consultant for the 
International Organization for Migration (IOM), told PolOff 
May 30 that she received two cell phone calls, while in 
Ciudad Del Este, from unknown persons threatening the lives 
of her, her husband and young children.  Bendlin stated that 
the callers gave her detailed information about her family 
life in Asuncion which prompted her to contact the National 
Police, Prosecutor Teresa Martinez (Chief TIP Prosecutor) and 
PolOff.  The callers also told her that she is no longer 
welcome in CDE for her work on TIP.  On behalf of IOM, 
Bendlin travels around the country to speak with victims of 
TIP and present reports of their progress to IOM in Buenos 
Aires (the regional office).  Bendlin was visibly distraught 
and disappointed over having to decide to stop working on 
TIP.  An investigation is on-going. 
 
SECOND PEACEKEEPING FORCE DEPLOYS 
 
¶3. (U) Paraguay sent a second platoon-size contingent of 
Paraguayan peacekeepers deployed to Haiti May 29 as part of a 
Brazilian peacekeeping battalion.  The contingent includes 31 
military personnel (6 officers and 25 noncommissioned 
officers).  A Brazilian Air Force aircraft returned with 
Paragauy's first Haiti contingent which deployed December 
2006 and transported the new group on the same aircraft. 
(NOTE: Paraguay has approximately 100 military personnel 
participating in 8 UN PKO missions. END NOTE.) 
 
DIRECTOR OF INTELLECTUAL PROPERTY LEAVING POST 
 
¶4. (SBU) Astrid Weiler, who has been the Director of 
Intellectual Property since 2003, will soon leave her 
position and begin working for the Tax Administration as 
coordinator of formalization efforts in Ciudad del Este. 
Weiler has been a key interlocutor and the driving force 
behind the progress Paraguay has made in improving its IPR 
regime in recent years.  She was the principal negotiator for 
the current MOU on IPR between the US and Paraguay and she 
instituted a registry system for blank optical media that 
helped law enforcement entities such as the INL-supported IPR 
investigative group known as UTE to uncover a number of cases 
of tax evasion against optical media importers.  Weiler told 
Econoff that the move is motivated in part by a perceived 
drop-off in support for her efforts after both the Minister 
of Industry and Commerce and the Vice Minister of Industry, 
her immediate supervisor, were replaced in August 2006. 
Current Minister Ibanez and Vice Minister Ojeda are both 
considered more "political" than their predecessors.  Vice 
Minister Ojeda has been less supportive than previous Vice 
Ministers and has put pressure on Weiler and UTE on behalf of 
CD and DVD importers. 
 
¶5. (SBU) Weiler told Econoff that the team with whom she will 
work in the Tax Administration is more serious and more 
insulated from political pressures.  The current Minister of 
Finance, Ernst Bergen, was the first Minster of Industry and 
Commerce under the current administration.  The head of the 
Tax Adminisration, Andreas Neufeld, has been one of the 
administration,s strongest officials and has made 
significant improvements in the Tax Administration.  Neufeld, 
a Mennonite, even agreed to take a polygraph examination as 
an example for his employees who had been asked to undergo 
the exams as part of the MCC Threshold Program which is 
 
 
supporting a tax criminal investigative unit.  Neufeld 
passed.  In a separate meeting with econoff on May 30, Vice 
Minister of Industry Ojeda said he wanted to leave Weiler,s 
position vacant and oversee the IPR function himself since he 
worries that a replacement for Weiler might undo the progress 
made to date.  Even if he does seek a replacement, it will be 
difficult for the GOP to find a qualified individual willing 
to take on that position with a year left in the current 
administration. 
 
CIVIL SOCIETY INPUT FOR MCA 
 
¶6. (U) The Ambassador, USAID Director and Minister Walde 
awarded ten Paraguayan NGOs competitive sub-grants under 
Paraguay,s MCA Threshold Program directed at anti-corruption 
May 29.  The NGOs, which included community, research, and 
youth organizations, universities, and the local chapter of 
Transparency International, will implement ten-month projects 
designed to complement and/or provide citizen oversight of 
GOP efforts under the Threshold program.  The program is 
designed to combat impunity, enhance transparency, and 
improve accountability.  The GOP,s execution of the MCA 
Threshold program is supported by a standing Citizens 
Advisory Council briefed regularly and candidly on program 
progress. 
 
SUPPORTING TRANSPARENCY IN LOCAL LEADERSHIP 
 
¶7. (U) The USAID Director joined Blas Lanzoni, the Mayor of 
Nemby (Paraguay,s fastest growing city) at the signing of an 
agreement for USAID-funded technical assistance and 
performance measurement system.  Lanzoni, the head of the 
Liberal Party,s national mayors association, is generally 
known for a commitment to transparency and citizen service, 
and was re-elected last December for another term -- unusual 
for a municipality that had five mayors in the six years 
preceding Lanzoni,s first term.  Nemby is the 40th 
municipality to be accepted for USAID local government 
assistance. 
SUPPORT FOR ETHICS CODE GROWS 
 
¶8. (U) A wide array of key bar associations and leading civil 
society organizations signed on to an "Integrity Pact," to 
increase public scrutiny of ethics in Paraguay,s opaque and 
still highly-politicized justice sector.  The pact builds on 
a judiciary Ethics Code developed with USAID assistance and 
approved by Paraguay,s Supreme Court in 2006.   Regional 
legal experts have cited the code as a model and  the most 
advanced in Latin America given its provision for enforcement 
bodies and mechanisms.  Since its inception, Paraguay,s 
Ethics Tribunal has considered more than 30 cases and made 19 
disciplinary rulings, including reprimands of several 
standing ministers of the Supreme Court. 
 
COURT BACKS TAX COMPLIANCE 
 
¶9. (U) The Supreme Court approved this week the GOP,s plan 
to temporarily close businesses found not in compliance with 
tax code obligations.  With assistance from the USAID-managed 
MCA Threshold program, the GOP,s Tax Service is putting in 
place an aggressive business tax compliance program.  Recent 
simulated purchases and probing of business practices in 
Asuncion found more than two-thirds of "tested" businesses 
not issuing proper invoices. 
 
 
FITZPATRICK