SOURCE: PY 503
   ATTRIBUTION: Paraguayan politics, society
   SOURCE DESCRIPTION: Consultant for Govt Commissions of IR, previous
   experience Foreign Min
   PUBLICATION: If desired but this is really just background
   SOURCE RELIABILITY: untested
   ITEM CREDIBILITY: 6
   SPECIAL HANDLING: none
   DISTRIBUTION: Latam
   SOURCE HANDLER: Allison

   BRAZIL
   - In the past Paraguay used to use its relations with Argentina and Brazil
   as leverage with one against the other.  Now there's a general consensus
   in Paraguay that the relationship with Argentina doesn't matter nearly as
   much as it's relationship with Brazil and that it is pretty firmly set in
   Brazil's sphere of influence.  Brazil is seen as the #1 country of
   importance right now for Paraguay.

   - Trade with Brazil is problem for Paraguay, especially since the latter
   doesn't produce value-added goods.  Many time Paraguay soy and wood will
   be bought in large quantities by Brazil and then exported (as is or with
   value-added) as a Brazilian product. 

   - Paraguay is historical an unstable country and it does makes sense for
   Brazil to have troop exercises along the border. He said that, in a very
   exaggerated scenario, Paraguayans he themselves are the threat for
   sabotaging Itaipu - either unrest getting out of control, some one just
   doing something stupid or an extreme way of trying to get revenge on
   Brazil.  He said  that, though he doesn't see something like this as
   extremely likely, you can't discount it as a random possibility should
   Paraguay become unstable again and for this reason it makes sense (to the
   source) for Brazil to have troops along the Southern Border.  Source said
   that in his conversations with Brazilian officials he was told Brazil's
   military has a contingency plan to secure Itaipu in the event its
   production security is compromised (again this last sentence is secondary
   info).

   ITAIPU
   - A delegation for Paraguay's legislature is expected to visit the
   Brazilian Congress within the next week or 2 to discuss the approval of an
   agreement made in July 2009.  However, the general sentiment in Paraguay
   is that Brazil will not do anything important regarding Itaipu until after
   the October elections.

   - In December Brazil will discuss its budget for next year.  Paraguay sort
   of views this as an informal deadline for approving the July 2009
   agreement that alters prices/fees.  The idea is that the 2010 budget will
   reflect Itaipu profits/purchases.  If the agreement doesn't get pass
   through before the budget is designed, then the expectation is that 2010
   budget won't take any price changes in to consideration.

   - There is very little infrastructure currently in place for Paraguay to
   export Itaipu electricity to customers other than Brazil come 2023.

   VENEZUELA
   - As mentioned, most Paraguayans don't care too much about foreign policy;
   they do however care very much about domestics politics.  The questions
   regarding Paraguay's relationship with Venezuela (a phenomenon) has been
   the source of so much debate because the issues has been internalized by
   Paraguayan political parties thus making it a topic of national debate
   (when ordinarily it'd go unnoticed).  The debate centers around parties'
   opinions abut Chavez (is he good or bad); if Chavez wasn't in office the
   question of Ven's entrance in to Mercosur would draw little if any
   attention/debate.

   - Paraguay feels that, to a large extent, it's in a position in which is
   must choose between the US and Venezuela.  It feels like you can't really
   be friends with both countries at once.  The fear is that, given the need
   for unanimity in many Mercosur decision, the Chavez presence would
   compromise possible future trade agreements with countries like the US.

   - The Senate just started a new session July 1.  The question of Ven's
   Mercosur membership is expected to be put back on the table during this
   session.

   - Within the past 4 or 5 years Colombia has shown an increased interest in
   collaborating, supporting in areas of security with Paraguay.

   CHINA
   - Paraguay is one of the biggest countries that recognizes Taiwan and the
   Pres of Taiwan makes yearly visits to Taiwan.  When Paraguay (government
   or politician) needs funds for a project it many times can just outright
   ask the Taiwanese for the money and it's freely handed over.

   - Paraguay has a huge amount of interest in pursuing its economic/trade
   agenda with China, especially in areas of investment.  Right now there is
   a popular belief that increasing commercial ties with China will not harm
   political ties with Taiwan.

   RUSSIA
   - Russia is a hugely important market for Paraguayan meat exports. 
   Paraguay saw the Russian Frgn Min's visit as a really big deal.

   - Paraguay was looking to improve relations/get a Russian embassy as far
   back as 2004.  Russia was a lot of talk but did little action.  In 2008
   Paraguay started talking to Ukraine about having an embassy in Paraguay. 
   In 2009 Russia opened its embassy in Asuncion; next to no advancements
   have been made with Ukraine.  Many Russian embassy employees in Asuncion
   still struggle with Spanish and the relations between the two were
   described as in their beginning but with mutual interest for development.

   - Paraguay doesn't have the money to buy many armament and often prefers
   to get things as donations rather than pay.  There is mutual interest on
   both parts to introduce arms/security as a major theme of bilateral
   interest but the relationship needs to develop further before such
   discussion can seriously occur and advance.

   OTHER ACTORS
   (this is primarily in response to interest in Paraguay's business
   community.  I had no idea what the important business community consisted
   of in Paraguay but at least now they are identified).

   - The media is a powerful entity in Paraguay in terms of being able to
   influence politics and controlling large amounts of money.  Depending on
   their own interests they will change who they support.  ABC is the main
   newspaper and was inaugurated by Stroessner. Radio Nanditu is the main
   radio company that was back in the day  run by a  crony of Stroessner.
   Telefuturo is the main television company.  I was told these companies
   have different owners but do communicate with one another.

   - Importers are the big business players in Asuncion and the importers'
   union does have political/financial weight.  Since Paraguay has no
   domestic industry it has no need for big tariffs on imported goods.  That
   said many importers  bring in goods not only for domestic consumption but
   also for  export to Brazil as well as for the informal/black market. (that
   is to say, they tend to import way more than Paraguay alone can consume) 
   In Paraguay a private company can set up its own port for trade along the
   rivers.  If you put the dock out there to send/receive shipments, you can
   import goods.  Customs officials will be sent from Asuncion these
   particular locations; it's a system that leaves an open door for
   corruption and smuggling.  Those representing business within Paraguay
   have also been able to amass small fortunes.  For example, former
   President of the Senate and influential politician  Miguel Carrizosa 
   earned most of his wealth by being one of the Voklswagon reps in Paraguay.

   - The Associacion Rural del Paraguay is also a  group that can exercise
   political power within Paraguay.  The members tend to be wealth and pretty
   large land owners.  Right now they are asking the Government to redeploy
   the military to the North to ensure security in the area; they are also 
   becoming more critical of the government for not taking this action.

   - There are only about 5,400 people working in the banking sector in
   Asuncion (according to an Ultima Hora news article yesterday).  Main banks
   in the country are: HSBC, Citibank, BBVA, Banco de la Nacion Argentina,
   Interbanco, Sudameris Bank, Banco do Brasil, Integracion, Amambay,
   Familiar, BNF, Vision Banco, Itapua and Promedio.