Rumsfeld is impressed with Paraguay's leadership and its commitment to strengthening its national security to deal with issues in the region and to reform its military, he told reporters following a 90-minute meeting in Frutos' presidential residence.

Frutos assembled his key staff, including Gen. Jose Key Kanazawa Gamarra, chief of the defense forces; Roberto Gonzalez Segovia, minister of defense; and Vice President Luis Castiglioni Soria, for Rumsfeld's first visit to Paraguay as secretary of defense. U.S. Ambassador to Paraguay John Francis Keane also attended.

"I must say, I was most impressed with his team and their determination to deal with the problem of corruption," Rumsfeld said. He called corruption "corrosive" to a country and its efforts to create an environment that provides economic opportunity.

While working to strengthen Paraguay's economy, the country's leaders also are focused on modernizing their military and creating a better-trained, modernized force capable of addressing security issues in the region.

Paraguay has been a counterterrorist champion in the unruly "tri-border region," where its borders converge with those of Argentina and Brazil.

A senior defense official traveling with Rumsfeld described this area as a center not only for trade, but also for smuggling and other illicit activities.

Rumsfeld noted the solid cooperation being demonstrated in the region as Paraguay and other nations work together to counter problems ranging from hostage taking to drug trafficking and gangs.

Rumsfeld and Frutos also discussed concerns about growing Cuban and Venezuelan influence in Bolivia, Paraguay's neighbor to the west. Cuba's aggressive foreign policy agenda, bankrolled by Venezuelan dollars, is having an "unhelpful" influence in the region, the secretary said.

"Countries like Paraguay and other neighbors are all interested in being able to grow and function in a manner that's free of external influence," he said.

"This is a concern to all the neighbors (of Bolivia)," a senior defense official told reporters. The challenge, not only for Paraguay or the United States but for the inter-American system as a whole, is to help the Bolivians steer this situation to a democratic outcome, he said.

The secretary praised Paraguay's leaders for their interest in assuming a larger role in peacekeeping activities, including the U.N. mission in Haiti.

A full range of exercises, from peacekeeping to counterterrorism to medical readiness, is enhancing Paraguayan military capabilities and bolstering the country's ability to carry out those missions, while providing an important bond between the two countries, Rumsfeld said.

A recent medical-readiness exercise here provided medical care for 12,000 Paraguayan citizens while providing value medical training to U.S. Army Reserve medical teams operating in a tropical environment.

Rumsfeld acknowledged Paraguay's recognition that it needs to work closely with its neighbors and allies to address problems that go beyond its immediate borders.

"The kinds of problems that the hemisphere faces are problems that don't lend themselves to single-nation solutions," he told reporters during the flight here.

"It requires cooperation. ... We're seeing that kind of increasing cooperation in Central and South America, and that is a very healthy and necessary thing."

The secretary told reporters traveling with him that he recognizes the importance of the region. Since becoming defense secretary in January 2001, Rumsfeld has visited Latin America four times, with stops in Chile, Colombia, Honduras, El Salvador, Nicaragua, Panama, Ecuador, Argentina, Brazil and Guatemala. He also visited the U.S. Naval Base at Guantanamo Bay, Cuba, in January 2002.

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