Paraguay's former president is accused of orchestrating the expulsion of a prominent senator, as concerns grow that the ex-leader's influence, sanctioned by the U.S. for corruption, is dragging down Latin America's star economy.
Center-left Senator Kattya González, an outspoken critic of politicians' ties to organized crime, was expelled from the Senate last month. She claims her removal was illegal and ordered by former President Horacio Cartes – one of the main targets of her corruption allegations.
At least a dozen business associations have warned that the exclusion will damage Paraguay's growing image as a haven for investors in South America.
Cartes, a cigarette tycoon and one of Paraguay's richest people, ruled the country from 2013 to 2018 but has since been sanctioned by the US for “significant corruption.” As president of the ruling right-wing Colorado party and owner of several media outlets, he still wields great influence.
“Horacio Cartes had the deciding vote [my expulsion]“Although he is not a legislator,” González told the Financial Times. “They wanted to send a very strong signal to the rest of the opposition that those who denounce wrongdoing will be censured.”
Current President Santiago Peña lacks his own legislative base and relies on the former president, analysts say © Jesus Hellin/Europa Press/Getty Images
Analysts say current President Santiago Peña, a technocrat without his own legislative base, relies on Cartes, his mentor. Peña declined to comment on González, citing the independence of the legislature.
“Cartes makes the decisions, there is no doubt about it,” said Sebastián Acha, a political analyst and former congressman from a center-right opposition party, adding that González's expulsion was a “show of force” by pro-Cartes lawmakers.
González is known for denouncing lawmakers she believes are corrupt in social media videos and in Congress.
Cartes' lawyer Pedro Ovelar disputed González's claims that the former president was behind her removal, saying senators cast their votes “completely freely” and that she “drew attention to them.” [Cartes]”To avoid scrutiny.
However, she is not the only one to accuse Cartes of undue influence. The US sanctioned him in January 2023, saying he “continued to influence legislative activity after leaving office, targeting political opponents and bribing lawmakers to steer votes in his interests, with top supporters reaching up to 50,000.” US dollars received monthly”.
Ovelar denied the claims, saying they were intended to discredit Cartes' movement ahead of Paraguay's elections last April.
González was expelled after Colorado senators accused her of “abuse of influence” in managing and hiring staff. She said the allegations were “absolutely false” and filed a complaint with Paraguay's Supreme Court in the hope of reversing her expulsion. She argues that the move, approved by a simple majority of 23 votes, violates rules that require 30 votes to remove senators.
Former President Horacio Cartes is accused of smuggling and money laundering as well as ties to the Lebanese militant group Hezbollah © Norberto Duarte/AFP/Getty Images
Their plight has attracted international attention. The ambassadors of the EU, Great Britain, Spain, France, Italy and Germany met González at the end of February, along with a US diplomat. The Europeans shared a photo of the meeting with the caption: “Always [standing] with the rule of law and democracy in Paraguay.”
Businesspeople said they were worried the attention would jeopardize investments. “It sends the message that we are not a country to be taken seriously,” said David Caballero, president of the Paraguayan Business Association. “We ask lawmakers to think more about the image we build abroad.”
The episode was a headache for Peña, a former IMF official who portrayed himself during the campaign as a modernizer for Paraguay and the party that has ruled for 65 of the last 69 years, including during a long military dictatorship.
His critics say important decisions are not made in the presidential palace, but “in the pavilion” – a reference to Cartes' villa in Asunción.
“Peña. . . gives a very good, professional image of Paraguay,” said Mariano Ortiz, senior economist at investment bank BancTrust. “But when you have the impression that power is in Carte’s shadow, there are limits to what he can do.”
Over the past two decades, Paraguay's low inflation and disciplined public finances have helped create one of the region's fastest-growing economies, despite high levels of inequality.
Last month, S&P raised Paraguay's rating to BB+, one notch below investment grade, in line with Moody's and Fitch. Days later, Paraguay held its first international auction of government bonds in the local Guaraní currency.
But Ortiz said Paraguay cannot continue this rise without strengthening its institutions.
Corruption in Paraguay is “systemic” and “a way of doing politics,” said Luciana Torchiaro, Latin America adviser for Transparency International, the anti-corruption organization.
Over the last decade, regional gangs, increasingly moving drugs and weapons through the landlocked country's barely controlled rural areas, used bribery as a door into politics and gained “protection to expand their illegal activities with impunity,” Torchiaro said.
In 2022, Marcelo Pecci, Paraguay's top anti-mafia prosecutor, was assassinated while on his honeymoon in Colombia.
The United States has accused Cartes of ties to the Lebanese militant group Hezbollah, while the head of a congressional commission in Paraguay said its investigation identified Cartes “as the head of a broad cigarette smuggling and suspected money laundering network.”
Ovelar said the U.S. has never provided evidence to support its allegations and that Cartes' tobacco companies have “always complied with all Paraguayan laws and regulations.”
He added that it was “absolutely unfounded to shift blame.” [Cartes] for contraband or human trafficking, because once the product is legally sold in Paraguay, the company loses all control over what happens to the product.”
González's expulsion could be a turning point for Cartes' influence in Paraguay, said Acha, the analyst, noting that it has heightened tensions between his supporters and rivals within the Colorado Party that could hurt the former president.
David Riveros García, founder of the anti-corruption campaign reAcción, said he feared other lawmakers could be targeted for expulsion.
“Many of us feel that way[the start]a more aggressive authoritarianism of 'Cartismo,'” he said. “The fate of our democracy will be decided in the internal negotiations of the Colorado Party.”
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