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International Narcotics Control Strategy Report, 1998
Released by the Bureau for International Narcotics and Law Enforcement Affairs,
U.S.Department of State 
Washington, DC, February 1999

PARAGUAY 

I. Summary 

Paraguay is a transit country for as many as 40 metric tons of
primarily Bolivian cocaine that move each year en route to Argentina,
Brazil, the U.S., Europe and Africa. It is also a source country
for high-quality marijuana. Significant money laundering occurs,
but it is unclear what portion is drug-related. In 1998, the Government
of Paraguay (GOP) signed a new bilateral extradition treaty with
the United States which includes the extradition of nationals.
Election year politics, judicial and other public corruption,
the ongoing reform of the legal system and scarce resources have
frustrated GOP-stated intentions to address counternarcotics issues.
As a result, the GOP has had only limited success against major
trafficking organizations, seizures of cocaine, and action against
money laundering. 

II. Status of the Country 

Transit of cocaine through Paraguay is facilitated by Paraguay's
centralized location in South America, an extensive river network,
lengthy and undeveloped land borders, numerous unpoliced airstrips,
and limited resources and authority for law enforcement operations,
and persistent official corruption. 

A significant level of money laundering occurs in Paraguay, although
it is largely the result of contraband trade, tax evasion and
capital flight, rather than narcotics trafficking. In 1997, the
GOP was credited for promulgating a strong anti-money laundering
law, which provided the legal tools necessary to act against this
criminal activity. In 1998, the GOP failed to implement the law
by not funding or staffing the offices created to control money
laundering. There were no money laundering prosecutions in 1998.

III. Country Action Against Drugs in 1998 

Policy Initiatives. The major accomplishment by the GOP in 1998
was the signing in November of a new bilateral extradition treaty
with the U.S., which includes extradition of nationals. The treaty
now must be ratified by the Paraguayan Congress before it takes
effect. The GOP also prepared draft legislation explicitly authorizing
undercover operations and controlled deliveries for counternarcotics
law enforcement, and intends to submit it to Congress in 1999.

The effectiveness of the National Anti-Narcotics Secretariat,
SENAD, is limited by the lack of financial resources to do serious
investigative work and carry out interdiction operations. The
GOP has yet to adopt a timetable for meeting all 1988 UN convention
objectives, although its commitment to do so is explicitly included
in the National Anti-Drug Strategy. 

Accomplishments. The Cubas Grau administration, which assumed
office in August, raised salaries by roughly 80 percent for the
anti-narcotics directorate (DINAR) special agents and SENAD financial
department personnel (while straightlining SENAD's overall budget)
and named a new coordinator for SENAD who had extensive experience
in counternarcotics and is widely viewed as professional. However,
counternarcotics operations were virtually paralyzed in 1998 by
the national elections and their aftermath. 

Law Enforcement Efforts. The GOP cooperated in DEA investigations,
but was ineffective in carrying out its own investigations of
major traffickers operating in Paraguay. As of October 31, SENAD
had seized 215 kilograms of cocaine (up from 61 kilograms in 1997)
and 75,057 kilograms of marijuana (up from 16,782 kilograms in
1997). During that period the head of a cocaine smuggling operation
based in Pedro Juan Caballero was arrested as well as 163 suspected
low-level narcotics violators. SENAD participated in a joint precursor
chemical investigation with Bolivian authorities that resulted
in the March seizure of 37,000 kilograms of sulfuric acid (in
Bolivia). Asset seizures--a new frontier for Paraguayan justice,
complicated by prior conviction requirements--were minimal.

Corruption. Despite continuing reports from a variety of
sources that public officials, including judges, military, police
and legislators were suspected of engaging in, encouraging, or
facilitating the illicit production or distribution of illegal
narcotics, or the laundering of proceeds from illegal drug transactions,
no serious investigative efforts were initiated by the GOP to
confirm or contradict these suspicions. Judicial corruption was
suspected in the release of a major cocaine trafficker in July
1998 in the Asuncion suburb of Fernando de la Mora. SENAD filed
a formal complaint against the judge with the Attorney General's
office, which has yet to take action on the charges. 

Agreements and Treaties. Paraguay became a party to the
1988 UN Drug Convention in 1990 and is a party to the 1961 UN
Single Convention and its 1972 protocol. It has ratified the OAS
Convention on Corruption, signed the OAS/CICAD Hemispheric Drug
Strategy, and agreed to the Declaration of Principles and Plan
of Action adopted at the Summit of the Americas and at the 1995
Money Laundering Ministerial. It entered into a bilateral assistance
agreement with the United States in 1987, which was extended in
1997, meeting the requirements of the Chiles Amendment. Paraguay
and the United States signed a new extradition treaty, which includes
provisions for the extradition of nationals, in November. Paraguay
has entered into tripartite law enforcement agreements with Argentina
and Brazil, and with Argentina and Bolivia, and has similar bilateral
agreements with Brazil, Argentina, Chile and Venezuela. 

Cultivation and Production. Cannabis is the only illicit
crop cultivated in Paraguay, and is harvested throughout the year.
According to a rough estimate by the GOP, 2,500 hectares are under
cultivation. SENAD believes marijuana production has increased
this year. DEA reports that marijuana is primarily cultivated
in the hilly regions of Eastern Paraguay near the Brazilian border.
The Department of Amambay is the leading cultivation area of marijuana
crops, particularly in the areas of Captain Bado, and the hills
near Pedro Juan Caballero. The Department of Canindeyu is the
second largest marijuana producing area, followed by isolated
crops in the Caaguazu and Alto Parana. 

Drug Flow/Transit. According to Drug Enforcement Administration
(DEA) estimates, annually, approximately 40 metric tons of Bolivian
(and some Colombian) cocaine transits Paraguay each year en route
through Argentina and Brazil to the United States, Europe and
Africa. 

Demand Reduction Programs. Paraguay has a relatively small but
growing substance abuse problem. SENAD has the chief coordinating
role under the National Program Against Drug Abuse, and works
with the Ministries of Health and Education, as well as with local
non-governmental organizations. 

IV. U.S. Policy Initiatives and Programs 

Policy Initiatives. USG priorities are to disrupt narcotics
trafficking through the formation and training of an effective
investigative capability and the passage of legislation authorizing
controlled deliveries and undercover operations, as well as criminalizing
drug- related conspiracy; combat money laundering through effective
implementation of the law criminalizing such activity; decrease
public corruption that facilitates illegality; strengthen democratic
institutions, especially those connected to law enforcement; facilitate
international cooperation through ratification of a new bilateral
extradition treaty; and increase public awareness of the threat
narcotics poses to Paraguayan society and democracy. 

Bilateral Cooperation. INL continued support for the Detector
Dog Program, and provided equipment support to SENAD. INL also
provided money laundering investigation training to SEPRELAD through
the Financial Crimes Enforcement Network (FinCEN). DEA provided
aerial survey teams that identified suspicious activity and sites,
including new clandestine airfields, along Paraguay's riverine
system and elsewhere, and held four regional basic investigation
courses in Asuncion. DEA also provided training, intelligence
and guidance on operations and investigations. DOD provided training
assistance to SENAD's interdiction unit. The United States Information
Service (USIS) sent two IVP grantees to the United States to participate
in counternarcotics journalism and demand reduction training programs
funded by INL. An INL-funded U.S. Customs narcotics interdiction
course was originally scheduled to take place in 1998, but was
postponed until 1999 due to reorganization of Paraguayan Customs
with the inauguration of the new Cubas administration. However,
three Paraguayan Customs official participated in a U.S. Customs
land border interdiction course conducted in the tri-border region
in August and three Paraguayan Customs officials attended a regional
port security course held in Lima during October. 

The Road Ahead. The GOP's task remains that of translating
its often-stated political will to reduce narcotrafficking, money
laundering, and public corruption into concrete enforcement successes.
This requires investigating major cocaine traffickers, making
significant seizures and arrests, carrying out successful prosecutions,
preventing the escape of arrested drug traffickers or their release
by corrupt judges, and implementing the anti-money laundering
law and provisions of the anti-drug law aimed at punishing and
preventing official corruption. During 1999 the USG will seek
to continue strengthening SENAD's Anti-Narcotics, Tactical Interdiction
and Financial Investigation Units, as well as SEPRELAD's Financial
Analysis Unit, through training, technical assistance and equipment
donations. The USG will also work with the executive and legislative
branches on ratification of the new extradition treaty, development
of effective chemical control laws, and passage of tougher anti-narcotics
law enforcement legislation that explicitly authorizes controlled
deliveries and undercover operations, as well as criminalizes
narcotics. 

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