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FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC 0119
INFO MERCOSUR COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/HQ USSOCOM FP MACDILL AFB FL
RHMFISS/HQ USSOUTHCOM MIAMI FL

id: 230948
date: 10/22/2009 21:03
refid: 09ASUNCION617
origin: Embassy Asuncion
classification: CONFIDENTIAL
destination: 09ASUNCION613
header:
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RR RUEHWEB
DE RUEHAC #0617/01 2952103
ZNY CCCCC ZZH
R 222103Z OCT 09
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC 0119
INFO MERCOSUR COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/HQ USSOCOM FP MACDILL AFB FL
RHMFISS/HQ USSOUTHCOM MIAMI FL
----------------- header ends ----------------
C O N F I D E N T I A L ASUNCION 000617
SIPDIS
E.O. 12958: DECL: 2019/10/22
TAGS: PREL PGOV KCRM PA
SUBJECT: AMBASSADOR AYALDE MEETS WITH PRESIDENT LUGO TO REVIEW
BILATERAL RELATIONS AND MUCH MORE
REF: ASUNCION 613
CLASSIFIED BY: HollowayPerry, DCM; REASON: 1.4(B), (D)
¶1. (C) SUMMARY: I met with President Lugo late October 16 at Lugo's
request. Lugo was in good spirits but very concerned about the
kidnapping of cattle rancher Fidel Zavala in Concepcion Department.
Lugo recognized that the EPP (Paraguayan People's Army) was "very
dangerous" and hoped for Zavala's safe release. Lugo decided not
to travel to Bolivia to meet with President Morales on the margins
of the ALBA meeting, and believed that his biggest problem at
present is the press, lamenting that his administration struggles
on a daily basis with public relations. I told Lugo I wanted to
take stock of our mil-to-mil relationship following the GOP's
decision to decline the New Horizons exercise, and he confirmed
that he wants to see military relations move forward. Lugo
expressed enthusiastic interest in the 1207 program. His goal
seemed to be to touch base with the Embassy and reassure himself
that our bilateral relations are on solid ground. He is obviously
worried about Paraguay's latest high-profile kidnapping that
strengthened his critics and was looking for someone outside his
inner circle to talk. We hope the current security crisis will
prod him to show more leadership, and will continue to encourage
him to nurture Paraguay's democratic institutions. END SUMMARY.
--------------------------------------------- -----
DETERIORATING SECURITY SITUATION
--------------------------------------------- -----
¶2. (C) I met alone with a relaxed President Lugo late October 16 at
his request. For the almost two-and-a-half hour meeting, we spoke
one-on-one. Though in good spirits, he was very concerned about
the kidnapping of cattle rancher Fidel Zavala in Concepcion
Department (Reftel A). Lugo told me he spoke to Colombian President
Uribe three times in less than 24 hours to discuss anti-kidnapping
assistance and that he was very pleased that Uribe had responded so
quickly with whatever was needed (both advisors and equipment). The
plane was arriving that evening with the team and equipment. Uribe
also told him that if he needed more or was not pleased with the
individuals he should let him know. (Note: I subsequently learned
that Uribe asked that the Colombian Anti-kidnapping Unit send its
best team as quickly as possible. President Lugo met with the
Colombian team of experts and Minister Filizzola the evening of
October 16, shortly upon arrival.)
¶3. (C) Lugo recognized that the EPP (Paraguayan People's Army) was
"very dangerous" and hoped for Zavala's safe and quick release. He
indicated that since the Lindstrom kidnapping in July 2008, the GOP
had been after the kidnappers and was doing good intelligence
collection in the Concepcion/San Pedro area. They had embedded a
handful of officers in the countryside who were living amongst the
peasants "with beards and all." Lugo said the EPP really knew
their territory (where Lugo served as a bishop) and their operators
could detect "even a new cow moving into it." Lugo believed the
original EPP core group consisted of about 15 people but that it
had increased to about 25. He thought the new operators were
extremely dangerous because they could react to anything (implying
killing the victim) and did not yet have the discipline to respond
to EPP leadership. Lugo indicated that the GOP had enough
information to pursue the kidnappers and had planned to do it this
week, but the EPP kidnapped Zavala before the GOP could move
against them.
¶4. (C) Lugo also went into detail about problems within the
National Police. He said police leadership had to change and that
replacements would be named soon. Lugo said Police Commander
Jimenez, though a very honest man did not have the
leadership/personality to tackle such a horrendously corrupt
institution. He referred to former Police Commander Machado, who
admitted being part of a corruption scheme ($100,000 per month to
allow meat trucks to enter Paraguayan customs). Lugo said Interior
Minister Rafael Filizzola was doing a good job but had little
support.
--------------------------------------------- -------------------
GETTING ALONG WITH PARAGUAY'S NEIGHBORS
--------------------------------------------- -------------------
¶5. (C) Lugo decided not to travel to Bolivia to meet with President
Morales on the margins of the ALBA meeting. Morales called Lugo to
offer a press conference first thing October 17 where they would
publicly shake hands and show the public that "all was ok." Many
Paraguayan leaders called Lugo to implore him to go and "give it to
the Bolivians" about their arms purchases. However, Lugo knew if
he went he would get blasted by the press for associating with the
ALBA members, so he knew it was a "lose-lose" situation. Lugo
asked his Embassy in La Paz for an analysis of why Bolivia was
purchasing arms. His Embassy had four hypotheses: because of 1)
Paraguay ; 2) Chile; 3) Peru; and 4) for domestic reasons. He
personally believed it was for the fourth reason since Morales was
concerned that at some point Bolivia would implode and divide and
he needed to bring everyone together. Lugo believes that Paraguay
was overreacting to Bolivia's arms purchase issue and said that if
a regional arms race were really an issue, Brazil and Venezuela
should be the focus - not Bolivia.
--------------------------------------------- -------------
CONTINUING PUBLIC RELATIONS PROBLEMS
--------------------------------------------- -------------
¶6. (C) Lugo believed that his biggest problem is the press,
lamenting that his administration struggles on a daily basis with
public relations. He was extremely annoyed by press reports that
his government planned to purchase a large tract of over-priced
land (owned by a family named Teixeira) . He indicated that he had
signed a letter of intent (no legal commitment implied), and pulled
out a notebook to show me the cost of the land ($31 million for 22K
hectares, or $1,400 per hectare with the going rate between $750
and $3,000). He was very frustrated that the press was accusing
him and his Chief of Staff Lopez Perito of unjust enrichment and
believed Teixeira's lawyer (Felino Amarillo) was behind the
scandal. Lugo said they were welcome to investigate his government
and that they had done nothing wrong. (COMMENT: Press reports paint
another picture, indicating that Teixeira, one of Lugo's primary
campaign fundraisers, purchased a tract of land a year and a half
ago for $11 million that he now wanted to sell to the GOP for $31
million. Allegations are that Lugo signed this letter of intent
after the April election but before assuming office in August 2008.
Due to the controversy, the purchase is currently on hold. END
COMMENT).
--------------------------------------
BULKING UP STATE COFFERS
--------------------------------------
¶7. (C) Lugo told me the GOP was considering hiring the law firm of
Patton & Boggs to recover stolen assets for the state. He raised
this to inquire about the firm's reputation. He indicated that he
had already met with them twice and that the GOP had a list of 30
possible targets. As an example, Lugo said the former Itaipu
director, Senator Victor Bernal, has $30 million in his bank
account (allegedly accumulated during his time at Itaipu). He said
Patton & Boggs had successfully seized assets in other countries
(in Africa, for example) and that they would not be interested if
this was not lucrative for the firm. According to Lugo, Patton &
Boggs would get 10 - 20 % of what they recover. (NOTE: U.S.
company Crescent Oil has also been considering hiring Patton &
Boggs to work on a commercial dispute; Lugo appeared to be unaware
of this connection. END NOTE.)
-----------------------------
MILITARY RELATIONS
-----------------------------
¶8. (C) I told Lugo I wanted to take stock of our mil-to-mil
relationship following the GOP's decision to decline the New
Horizons exercise. I emphasized that we respected the GOP's
decision but were confused by their signals, and particularly his
September 26 speech in Margarita Island. Lugo jumped up in his
chair and said "I know that they want us to be enemies but I'm not
going to fight with you (the United States). There is nothing to
this." He explained that he accepts input for his speeches from
all actors, so presidential advisor Gustavo Codas, Chief of Staff
Lopez Perito (neither believed to be pro-U.S.) and others may
provide their comments but in the end he passes a draft to
Communications Advisor Dos Santos. Dos Santos, Lugo said, has good
judgment and is more neutral. Lugo asked what bothered me about
his speech and I explained that he blamed the "country to the
north" for Paraguay's poverty. Lugo disagreed, stating that he
never pointed to the United States. He reminded me of the context
of the conference, which were largely poor countries. He said he
would be happy to share a copy of his speech with me, and again
cited the press as his biggest enemy.
¶9. (C) Lugo said he envisioned our mil-to-mil relationship moving
forward. "We have lots of programs with the U.S.," he said, "and
we should continue." I noted that it was sometimes hard to know
what the GOP wanted in terms of U.S. assistance, particularly on
military cooperation, and that it was helpful to have written
requests for assistance from them based on their own defense
security strategy. Lugo agreed, and acknowledged that Paraguayans
do not always clearly state their intentions. He worried out loud
about the Japanese and the Korean Ambassadors who were putting so
much time and effort into learning Guarani. In the end, Lugo said,
they still won't understand Paraguayans.
-------------------------------
OTHER US ASSISTANCE
-------------------------------
¶10. (C) Lugo expressed enthusiastic interest in the 1207 program,
and recommended we coordinate with his Ministries of Interior,
Agriculture and Industry/ Commerce. He also indicated that he had
visited Paraguay's Anti-Money Laundering Secretariat (SEPRELAD) and
saw the good work that they were doing. (NOTE: Embassy supports
SEPRELAD with INL funds. END NOTE). Lugo said he was shocked at
their small staff and the conditions in which they were working. He
was not pleased that they were working in a basement and wanted to
move them into the Presidency and provide them with the support
that they needed. I noted that we were very pleased with SEPRELAD
Director Oscar Boidanich's work and were glad to see that the
Presidency would be providing them with more support.
-----------------------------
BIO REPORTING INFO
-----------------------------
¶11. (C) Lugo said his health had improved and the medication he was
taking for his circulatory problems was working. When his legs
hurt, he rested until he recovered. He said he continued to watch
his diet and exercise. I told him that I was exercising in my
small vegetable garden. He immediately said he wanted to show me
his garden, which was in his personal residence. Lugo personally
drove himself in a Jeep Cherokee (with his security chief in the
back seat) and my vehicle following him to his personal residence
in Lambare, a suburb of Asuncion. Once there, he showed me the
vegetable garden and the house itself. The walls were covered with
religious photos and photos of his political career including the
official document from the National Electoral Tribunal declaring
him the elected President of Paraguay. It is a simple house,
modified only with a closed circuit security system installed after
he was elected president. He said he likes to go there for peace
and quiet. He also talked about his retirement and his
interest in finding a nice small place in the country from which he
could write about his experiences.
---------------
COMMENT
---------------
¶13. (C) Lugo's goal seemed to be to touch base with the Embassy and
to reassure himself that our relations are on solid ground. He is
obviously worried about Paraguay's latest high-profile kidnapping,
and was looking for an opportunity to talk without a set agenda or
the press hovering nearby. It is clear that he wants to maintain
close relations with the United States in order to balance regional
politics and perceptions and may have been worried that his
rejection of the New Horizons exercise may have seriously damaged
our bilateral relations. Lugo's true intentions, however, are not
clear. We continue to have doubts whether he has a plan for
Paraguay or whether a leadership vacuum has allowed him to become a
part of someone else's plan. We also are not sure whether Lugo is
maintaining his priestly ethics, given all the media allegations of
corruption against his inner circle and in some cases him. In the
best case scenario, his lack of leadership is enabling others to
continue well-entrenched Paraguayan traditions of raping and
pillaging the state. Paraguay is the rumor capital of the world
and the intertwined relationships between people of power and their
political groups makes separating truth from fiction difficult.
Our hope is the current security crisis will prod Lugo to show more
leadership, and we will continue to encourage him to nurture
Paraguay's democratic institutions, before his political opposition
tears them apart. END COMMENT.
AYALDE
AYALDE
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