FILE ID:97030312.LAR

(From State Department Report)  (450)

WASHINGTON -- Following is the text of the State Department's
explanation for the president's decision on drug certification for

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The government of Juan Carlos Wasmosy cooperated fully with the United
States in 1996. Government of Paraguay (GOP) anti-drug efforts
improved substantially, and the government, took adequate measures to
further its compliance with the goals and objectives of the 1988 U.N.
Drug Convention. Scarce resources, public corruption, and an only
partially-reformed legal system remain obstacles to more effective
counternarcotics action, but the GOP has demonstrated its commitment
to combatting the drug trade.

President Wasmosy appointed an activist Director to the National
Anti-drug Executive Secretariat (SENAD) in June, who immediately
sought a closer, more productive relationship with the United States
and with Paraguay's neighbors. Assuming the post with a reputation for
honesty, Carlos Ayala made cocaine trafficking groups the SENAD's top
priority. He has removed anti-drug officers implicated in corrupt
practices, and focused Paraguay's investigative resources on
Paraguay's top traffickers. Under Ayala's leadership, SENAD developed
a comprehensive national anti-drug strategy, which President Wasmosy
presented to the nation in late fall. Ayala also launched a new
approach to combat drug abuse.

The Paraguayan Congress, with strong support from the executive
branch, in December enacted an anti-money laundering law consistent
with international standards. SENAD Chief Ayala initiated a revision
of Paraguay's anti-narcotics statute which would explicitly authorize
undercover operations and controlled deliveries. The GOP is pushing
for congressional approval of the amendment early in 1997.

The SENAD continued large-scale marijuana-eradication operations,
worked closely with DEA on training and equipping the Anti-narcotics
Police (DINAR) Special Intelligence and Investigative Unit, and
assessed the threat of precursor chemical trafficking and diversion in
Paraguay. Meanwhile, on the international front, the GOP signed
agreements with Brazil and Argentina to cooperate in combatting
trans-border criminal activity, including drug trafficking, and
Paraguayan officials initiated working-level coordination meetings
with counterparts in these countries. The SENAD also agreed with
Bolivian counterparts to share intelligence and to conduct joint

In 1997, the GOP should secure passage of a strengthened anti-drug law
and begin to forcefully implement its new money laundering statute.
The USG will assist the GOP in creating an interagency financial
crimes investigative unit. Paraguay also must improve its ability to
investigate drug and other organized crime groups in the tri-border
area, particularly in the cities of Pedro Juan Caballero and Ciudad
del Este, and we expect the GOP to pursue key drug trafficking and
corruption cases in the coming year.

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