SOME PARAGUAYANS FEAR U.S. 'SECRET AGENDA'

Closer Ties, Including Joint Military Exercises And A Visit By
Rumsfeld, Have Sparked Rumors Of American Plans To Station Troops There

ASUNCION, Paraguay -- Are the Americans coming?

That question continues to reverberate in this sleepy capital four
months after a "courtesy call" by Defense Secretary Donald H.
Rumsfeld unleashed a torrent of speculation about Washington's
reputed "secret agenda."

U.S. officials have categorically denied having any plans for a
military base here, describing the episode as a misunderstanding over
ongoing U.S.-Paraguayan military exercises.

Despite the denials, talk of detachments of Marines taking up
residence in this nation in the heart of South America has entered
the continent's political discourse.

"No Yanqui Troops in Paraguay!" read banners hoisted by protesters at
last month's Summit of the Americas in Argentina.

For Paraguayans who lived through a 35-year dictatorship that was
long backed by the United States, the daily images from Iraq have
stirred memories of American interventions in Latin America, one of
the battlegrounds of the Cold War.

"We don't need armies, especially foreign armies," Adolfo Perez
Esquivel, the Argentine Nobel Peace Prize laureate and leftist icon,
declared during a recent visit here. "It's important to remember that
once the troops of the United States enter a country, they never leave."

To many, the lingering controversy also illustrates the political and
social frailties of a long-isolated, landlocked nation still in the
formative stages of democracy 16 years after the dictatorship of
Alfredo Stroessner ended.

"Paraguay remains a country in gestation," said Oscar Torres, a
well-known legal scholar here. "We still haven't reached national
maturation. We are in our adolescence, and, consequently, full of
fears and ghosts."

The current president, Nicanor Duarte Frutos, is generally viewed as
a centrist, free-market advocate who has become aggressively
pro-Washington. The former journalist became the first Paraguayan
head of state received at the Oval Office, and his vice president,
Luis Castiglioni, also visited Washington -- trips that raised eyebrows here.

"Most all Latin American governments love to flirt with the North
Americans," Torres noted. "And the North Americans know very well how
to play this flirting game, how to use it to serve their own interests."

No one disputes that Washington has interests here and maintains a
substantial presence at its well-fortified embassy.

Paraguay is known as a smuggling and drug-trafficking corridor and is
suspected as a conduit for terrorist financing from the so-called
triple border region of Paraguay, Brazil and Argentina, an area that
has a substantial Arab population. U.S. officials have publicly
declared their concern about illicit drugs and terrorist funding
allegedly flowing from Paraguay.

U.S. authorities call the military exercises standard and largely
humanitarian in nature, involving no more than two dozen or so U.S.
troops at a time in this California-sized nation. Paraguayan
officials approved 13 joint exercises last spring, lasting through
the end of next year, but it wasn't until Rumsfeld's visit in August
that the maneuvers ignited a firestorm, especially in neighboring Brazil.

Former U.S. Ambassador John F. Keane, in an interview with the
Paraguayan daily ABC Color, characterized the imbroglio as bunk.

"The people who have a visceral anti-United States attitude resort to
whatever myth, whatever fabrication to try and discredit us," Keane,
a veteran envoy who has since retired, told the newspaper in late
October. "It doesn't surprise us. They have always done it."

But not all have condemned the notion of a tilt toward the United
States. Some here have applauded the idea of enhanced political,
commercial and even military ties to the United States, complaining
that Brazil -- an economic colossus here -- has had an unhealthy
stranglehold on this nation of 6 million, which suffers from high
unemployment and has little industry. Stolen cars, contraband
cigarettes and high-quality marijuana are among Paraguay's best-known products.

"Why shouldn't Paraguay have cooperative agreements with the United
States, which is one of the world's principal markets?" asked Sen.
Eusebio Ramon Ayala of the opposition Authentic Radical Liberal
Party, who favors expanded relations. "Paraguay is not a new Iraq,
and Asuncion is not a new Baghdad.... The Cold War is over, the
economy is ever more globalized.... Why should we rely so much on Brazil?"

On the newly resurgent left, critics charge that Washington is keen
to use Paraguay as a springboard to grab water, gas, petroleum,
hydroelectric power and other regional resources, while keeping an
eye on troubling political movements.

"The bases, the water, the power, the oil -- it's all connected,"
declared Ignacio Gonzalez, a 28-year-old sociologist and leftist
activist, who spoke in front of a busy McDonald's, frequently
displaying printouts from the Internet to bolster his points. "It's
all part of a much bigger, perfect strategy to protect and expand
American interests."

President Duarte and his aides, while open to the idea of expanded
commerce, have repeatedly denied any plans to allow a U.S. base here
or turn the country into a strategic asset for Washington. But public
perception has trumped his assertions.

"Let's face it: Donald Rumsfeld doesn't come to Asuncion to observe
how much it rains," said Benjamin Fernandez, a radio commentator
here, who spoke in his office as yet another deluge drenched this
steamy capital. "It makes sense for the United States to try and
define friends and enemies in the Southern Cone with respect to
matters on its agenda."

Many here also see an overarching political motivation: to send a
message of American might to the continent's leftist governments,
especially Venezuela's anti-U.S. president, Hugo Chavez. According to
this theory, the U.S. moves here are particularly aimed at
neighboring Bolivia, where Evo Morales, a populist and admirer of
Chavez, is the apparent winner in Sunday's presidential election.

In fact, much of the speculation here has focused on a largely
abandoned airstrip in the vast Chaco grasslands, near a speck on the
map not far from the border with Bolivia. U.S. officials have denied
as absurd widespread reports that the strip will soon host U.S.
warplanes and spy craft, aimed largely at Bolivia.

"For the United States, Bolivia could become another Cuba at any
moment," said Diogenes Martinez, a former Paraguayan interior
minister who looks askance at his nation's apparent embrace of
Washington. "That's one reason it's infantile to think that these
U.S. training missions are meant just to provide dental care and take
care of people's cavities."

The U.S. forces dispatched here for the exercises provide medical
care to the poor, among other humanitarian and military functions,
the U.S. Embassy says.

There is no sign of U.S. troops on the streets of this capital, which
has seen occasional anti-U.S. protests since the Rumsfeld visit. The
odd wall bears graffiti proclaiming Fuera Tropas Yanquis -- Yankee
Troops Out -- and is signed PC, the Spanish initials of the Communist
Party. Many of the joint exercises take place in far-off towns or
inside military installations.

"You have to wonder: Why would the Americans want to come here?"
asked Justo Villa-Santi, a curbside merchant. "If they want to help
people, that's fine. I'm all for that. We can use the help. But if
it's to fight a war? That's a different story."

Times special correspondent Pablo Cesar Amarilla in Asuncion and
Andres D'Alessandro of The Times' Buenos Aires Bureau contributed to
this report.