The real power behind Paraguay’s new president

On Sunday, April 30, moments after giving his acceptance speech, Paraguay’s president-elect Santiago Peña welcomed the former president, Horacio Cartes, to join him on the podium. The adoring crowd erupted into a roaring, rhythmic chant: “Horacio, querido, el pueblo esta contigo!” (Horacio, our dear, the people are with you!) as Mr. Peña, having embraced Mr. Cartes, enthusiastically sang along.

The U.S. State Department wasted little time congratulating Mr. Peña on his resounding victory, stating, it is looking forward to “working with President-elect Peña and his government to advance common interests like fighting corruption and impunity.” Good luck. Mr. Peña is not the one who should be congratulated. The real president-elect is Horacio Cartes, twice sanctioned by the United States for corruption, including, allegedly, for having ties to Hezbollah.

Despite such contradictions, for Washington, Peña’s triumph is a sigh of relief. Almost everywhere else in Latin America, Taiwan has been losing allies while China gains ground at the expense of U.S. interests. Alongside his noble aversion to global corruption, President Biden is laser-focused on China. Mr. Peña’s party is pro-Taiwan. His defeated opponent was not.

As a result, the U.S. foreign policy agenda in Paraguay looks like a twisted pretzel.

Washington has made significant efforts to fight Paraguay’s entrenched corruption in recent months by not only sanctioning Cartes twice, for corruption, but also by targeting Hugo Velazquez, the current vice president, for good measure. They join a growing list of Paraguayan lower ranking politicians, officials, and business people hit by Washington’s global anti-corruption crusade.

Cartes wields significant power in Paraguay and is known as one of the country’s wealthiest individuals due to his extensive business interests, including in the tobacco industry, which, according to Paraguay’s own, recent congressional investigation, drives the flourishing contraband trade for which Paraguay is known. However, his influence extends beyond his wealth. The former president is also viewed as a powerbroker within the country’s political establishment and retains significant political clout and influence over decision-making at the highest levels of government. His continued involvement in Paraguayan politics has raised concerns about the country’s capacity to effectively combat corruption.

With Cartes as the real power behind the throne, it is uncertain how the Biden administration will be able to effectively combat corruption in the country. The administration will have to navigate the competing pressures of keeping Taiwan’s last friend in South America while maintaining its anti-corruption agenda. This dilemma poses a significant challenge for the administration and raises concerns about the effectiveness of its foreign policy approach in Paraguay.

As for Peña and his Colorado Party, they can only please the White House on foreign policy issues. Indeed, they are a bulwark against China’s rising tide in Latin America — the last friend Taiwan has south of the Panama Canal. They are not economic populists nor friends of Venezuela’s Maduro regime.

Say what you wish about Mr. Peña (full disclosure: I met him twice and find him impressive): he is a young and talented economist, with Columbia University, the IMF, and a previous stint as his country’s economy minister under his belt. He is outstanding on all accounts — a worldly, pragmatic technocrat, an inspiring young leader with vision, affable, personable, smart, sensible, talented, inspiring, even honest to a fault.

Cartes, however, is not just his political mentor; or an influential former leader who patiently groomed him; or a powerful donor to whom Mr. Peña owes favors, which he can repay with an ambassadorship. Although Cartes is all the above, first and foremost, he is, as they say in Spanish, “El Patron” — “The Boss.” (Paraguay’s outgoing president recently compared Cartes to Al Capone). Peña owes his rise to Cartes, who bankrolled Peña’s nomination efforts in the party primaries last year, financed his presidential campaign, and lent his corporate brain trust to advise Mr. Peña and coordinate his campaign strategy.

Mr. Peña, therefore, is not the real winner of Sunday’s elections, nor will he be the real president. He will reign, but not govern, at least not when governing might conflict with Cartes’ interest. This is Paraguay, after all, country number 137 of 170 on the 2022 Transparency International Corruption Index, where illegal transactions are 40 percent of the national GDP, where transnational crime relies on terror finance networks to launder illicit money, where honest prosecutors are frequently recused, regularly reassigned, and occasionally assassinated, and where a weak and corrupt judiciary frequently runs aground investigations into illicit finance and organized crime.

That Paraguay’s Colorado Party will coordinate and cooperate with Washington is an ironclad guarantee. Just not when it comes to Cartes. If change is what the Biden White House was hoping for, this is not it.

As such, Washington is caught in the glaring contradictions of its own policy priorities, having to perform a delicate balancing act. Peña may be a good ally for foreign policy, but he will likely be an obstacle to the anti-corruption agenda. If the past is prologue, Washington will give Peña the benefit of the doubt, focusing on Peña, the technocrat. Peña, the pragmatist. Peña, his own man. Peña, the independent. Peña and Cartes: not the same.

Indeed, they are not. The former works for the latter, not the other way around.

Taiwan or not, this moment is a missed opportunity for change from what Paraguay is — a country whose corruption is a vector for organized crime and terror finance — to what Paraguay could be — a stable, prosperous, democratic powerhouse. The difference between the two? Mr. Peña’s stellar resume is what Paraguay could be. The Faustian bargain he struck to secure the presidency, is what Paraguay, in fact, is and will remain.

He did his bargain. President Biden might soon have to do the same.

Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies, a nonpartisan research institution based in Washington, DC. Follow him on Twitter @eottolenghi. Follow FDD on Twitter @FDD.