Cablegate: Paraguay Political and Economic Update, July 1 - 7

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SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE, JULY 1 - 7
2006

1. (U) SUMMARY:
-- National Indigenous Movement
-- Sexual Harassment in Military Academy
-- 1,500 Paraguayan Prostitutes in Spain
-- Fiscal Adjustment Law Effects Positive on Economy
-- Drug Judge Talks with Ambassador about Safety

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National Indigenous Movement
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2. (U) On 6/30, leaders from Paraguay's ten indigenous
nations announced the founding of a National Indigenous
Movement. The goal is to demand their rights and work towards
gaining representation in Congress. The leaders hope to
present a candidate in the next general elections. They feel
it is especially important to have indigenous representation
within the legislative branch because politicians from other
parties have made offers to the communities during election
times but failed to produce any significant improvement once
in office. The indigenous people feel ignored by the
government and do not have real access to the political
system or other public services such as health care and
education. The first convention of the new movement is
scheduled for September 2006. According to the 2002 census,
the indigenous population is 87,099, which represents 1.7
percent of the country's population.

3. (U) Comment: Local human rights activists and
international organizations confirm that indigenous groups do
not have good access to the political system, and that
government officials have generally neglected their needs as
their living conditions continue to deteriorate. In the
department of Boqueron in the Chaco where the indigenous are
most highly concentrated, the groups are well organized and
have gained government representation and funding on a local
level. There is a federation in the Chaco that incorporates
several of the country's 20 indigenous ethnicities. Experts
describe it as well organized though it comprises less than
80 percent of the indigenous population. The Paraguayan
Institute of Indigenous People (INDI) is the only institution
for indigenous people that receives limited funding from the
government. The indigenous groups do not enjoy direct
representation in the INDI; the president of the INDI is
appointed by the president of the country.

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Sexual Harassment in Military Academy
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4. (U) On 7/4, opposition senators complained to President
Duarte about the lack of action in cases involving the sexual
harassment of several women in the Mariscal Francisco Solano
Lopez Military Academy (Academil). On 5/2, senators had gone
to the Academy to hear the testimony of several female cadets
at the academy who said they had been sexually assaulted by
their superiors. One woman was reportedly expelled for having
an abortion. Senator Ana Maria Mendoza de Acha of the Beloved
Fatherland Party (PPQ) noted that two months had passed since
ten cases were confirmed and the director of the school, Col.
Ramon Brozzon Bareiro, had been called before the Human
Rights commission to address this matter. Yet still no action
had been taken.

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1,500 Paraguayan Prostitutes in Spain
--------------------------------------

6. (U) On 7/5, Gustavo Gomez Comas, the Chief of Paraguay's
Mission in Spain, announced there are 1,500 Paraguayan
prostitutes in Spain. He maintained that the Paraguayan
Embassy in Spain cannot intervene if the woman is not a minor
and is working according to her free will. Gomez Comas noted
that there are approximately 50,000 Paraguayans living in
Spain, half of whom do not have the proper legal documents.
According to Vice Foreign Minister Luis Morinigo 1,105

Paraguayans were either deported, detained, or expelled from
Spain from January to June 2006. That sum includes 650 that
were not admitted to the country and deported, 223 that were
detained, and 232 that were expelled from the country.

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Fiscal Adjustment Law Effects Positive on Economy
--------------------------------------------- ----

7. (U) Paraguay's Fiscal Adjustment Law, passed in 2005,
created a personal income tax which became effective for the
first time this year. The law and its implementation by the
tax administration are having a measurable effect on tax
compliance and formalization of the Paraguayan economy. The
number of registered contributors has been consistently
growing since 2002. Growth continues to accelerate with
39,000 new contributors registered in the first six months of
this year, an 11.9 percent increase in registration. A large
percentage of new registrants were previously in the informal
sector. The income tax allows for the deduction of virtually
all spending and was designed mainly as an incentive for
taxpayers to demand legal receipts for their purchases, which
in turn compels businesses to request legal receipts from
their suppliers to reduce their own tax burden, leading to
much higher levels of formal activity. The legal receipts
are issued in numbered pads that can be easily audited by the
tax authorities. The Finance Ministry reports a 19.9 percent
increase in taxes collected in the first half of 2006
compared with the same period of last year and the amount
collected exceeds the total collected in all of 2002.

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Drug Judge Talks with Ambassador about Safety
---------------------------------------------

8. (U) On 7/7, Alba Ma. Gonzalez Rolon, the judge who will
hear the drug case of Arnaldo Moreira de Macedo, talked to
the Ambassador in the office of Senator Armando Espinola, of
the Authentic Radical Liberal Party (PLRA), regarding her
concerns about her safety and that of her family. She
indicated that she has already received threats. The case is
expected to be adjudicated in October 2006. The Ambassador
conveyed U.S. Embassy support for her efforts and stressed
the importance we attach to a just rendering of this case.
(NOTE: Macedo is an associate of Ivan Mendez Mesquita, who
was extradited to the U.S. in June 2005. End Note.)
CASON

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