superrific
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because its not. it is used for laundering by regional gangs but it isnt some sort of cayman islands
Latin America Politics General Thread
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donbosco
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As I wrote on the previous page - look to Paraguay for contraband heaven.
I spent a bit of time in Ciudad del Este. There’s a bridge there over the border with Brasil called the Puente de Amistad. There is a steady stream of ‘smugglers’ literally marching across from P to B carrying all kinds of electronics etc. Trucks too. The customs agents don’t stop them for anything but bribes. Those agents have historically gone ‘on strike’ for raises and benefits — by actually doing their job and thereby completely gumming up a significant sector of the Paraguayan economy. When they get their raise they go back to taking bribes instead. This relationship to regional trade goes back to the 19th century there.
I spent a bit of time in Ciudad del Este. There’s a bridge there over the border with Brasil called the Puente de Amistad. There is a steady stream of ‘smugglers’ literally marching across from P to B carrying all kinds of electronics etc. Trucks too. The customs agents don’t stop them for anything but bribes. Those agents have historically gone ‘on strike’ for raises and benefits — by actually doing their job and thereby completely gumming up a significant sector of the Paraguayan economy. When they get their raise they go back to taking bribes instead. This relationship to regional trade goes back to the 19th century there.
superrific
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so everyone reading this understands, what you are describing is not money laundering. i have no doubt that is a pretty accurate description of a paraguayan black market. but it's just a black market. there are black markets everywhere. maybe more per capita and per gdp in paraguay than elsewhere.
CRHeel94
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President of Honduras is threatening to expel the US base if Trump goes through with mass deportation of Hondurans.This will go over well I'm sure. She's a real piece of work by the way...there's elections in Honduras later in the year. Should be very contentious.
ticotimes.net
Honduras Threatens to Expel U.S. Military Bases Over Trump's Deportation Plans
Honduras warns of expelling U.S. military bases if President-elect Donald Trump proceeds with mass deportations of Hondurans.
ticotimes.net
CRHeel94
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As I was looking up that bit of news, I saw that the government arrested the former Chief of the Armed Forces for an incident back in 2009 when the coup against el Zelaya took place.
ticotimes.net
Honduras Arrests Former Military Chief for 2009 Protest Death
General Romeo Vásquez and two top military officers arrested in Honduras over the 2009 killing of protesters during coup aftermath.
ticotimes.net
CRHeel94
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Maduro was sworn in yesterday for his third term. Pretty clear he didn't win the election. Mexico and Brazil (somewhat surprisingly) have both recognized the Maduro government. As far as I can tell, only two LatAm leaders were present: Cuba and Nicaragua.
Here's the Nicaragua despot showing up.
Here's the Nicaragua despot showing up.
It’s obvious he’s wearing a baseball cap indoors.
Is that a magenta Members Only jacket Dictator Ortega is sporting?
He looks old and decrepit.
donbosco
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"In this podcast episode WOLA’s Central America Director, Ana María Méndez Dardón, reflects on Bernardo Arévalo’s first year in office, as January 14, 2025 marks one year since the inauguration that followed his unexpected election.
As we discussed with Ana María in a podcast episode shortly after his inauguration, Bernardo Arévalo and his Semilla party had a very difficult time reaching inauguration day, notably due to active obstruction from Guatemala’s traditional, ruling elites, including the Attorney General’s Office. While citizen mobilization, largely indigenous groups’ mobilization, made it possible for Arevalo to democratically take office, the difficulties he and his party faced back then have remained, making it difficult to govern and, in turn, negatively affecting his popularity due to unmet expectations.
Three prominent obstacles that the Arevalo administration will continue to face from his first year to his second, Ana María highlights, are the office of the Attorney General and the powerful presence of other known corrupt actors within the government; the instability of his cabinet paired with a small presence of his party in Congress; and the powerful private sector’s ties to corrupt elite groups.
The Attorney General’s office has played an active role in blocking access to justice and promoting the persecution and criminalization of those who have been key to anti-corruption and human rights efforts, while maintaining the threat of forcibly removing Arévalo from office. Although Attorney General Consuelo Porras was sanctioned by the United States, along with 42 other countries, for significant corruption, Arévalo has determined that removing her would violate constitutional norms. (Her term ends in May 2026.) Ana María also notes alliances that Porras has cultivated with members of the U.S. Republican Party.
Despite the obstacles, Ana María notes possibilities for growth, including the launch of an alternative business association, a new national anti-extortion effort, and negotiation efforts with Congress.
Ana María also touches on the U.S.-Guatemala bilateral relationship during the Biden administration and expectations for the Trump-Arevalo relationship. During the Biden administration, it was evident that security and economic issues were top priorities, with notable bilateral engagement including multi-sectoral and multi-departmental efforts led by the Office of the Vice President to address the root causes of migration. It is uncertain whether the Trump administration will continue these efforts, and while some Republicans regard Arévalo as a strong democratic ally, the migration issue, particularly the incoming Trump administration’s plans to deter and deport migrants, may be the topline item in the bilateral relationship.
To follow Guatemalan developments, Ana María recommends independent media including Plaza Pública, Con Criterio, and Prensa Comunitaria.
Download this podcast episode’s .mp3 file here. Listen to WOLA’s Latin America Today podcast on Apple Podcasts, Spotify, iHeartRadio, or wherever you subscribe to podcasts. The main feed is here."
www.wola.org
As we discussed with Ana María in a podcast episode shortly after his inauguration, Bernardo Arévalo and his Semilla party had a very difficult time reaching inauguration day, notably due to active obstruction from Guatemala’s traditional, ruling elites, including the Attorney General’s Office. While citizen mobilization, largely indigenous groups’ mobilization, made it possible for Arevalo to democratically take office, the difficulties he and his party faced back then have remained, making it difficult to govern and, in turn, negatively affecting his popularity due to unmet expectations.
Three prominent obstacles that the Arevalo administration will continue to face from his first year to his second, Ana María highlights, are the office of the Attorney General and the powerful presence of other known corrupt actors within the government; the instability of his cabinet paired with a small presence of his party in Congress; and the powerful private sector’s ties to corrupt elite groups.
The Attorney General’s office has played an active role in blocking access to justice and promoting the persecution and criminalization of those who have been key to anti-corruption and human rights efforts, while maintaining the threat of forcibly removing Arévalo from office. Although Attorney General Consuelo Porras was sanctioned by the United States, along with 42 other countries, for significant corruption, Arévalo has determined that removing her would violate constitutional norms. (Her term ends in May 2026.) Ana María also notes alliances that Porras has cultivated with members of the U.S. Republican Party.
Despite the obstacles, Ana María notes possibilities for growth, including the launch of an alternative business association, a new national anti-extortion effort, and negotiation efforts with Congress.
Ana María also touches on the U.S.-Guatemala bilateral relationship during the Biden administration and expectations for the Trump-Arevalo relationship. During the Biden administration, it was evident that security and economic issues were top priorities, with notable bilateral engagement including multi-sectoral and multi-departmental efforts led by the Office of the Vice President to address the root causes of migration. It is uncertain whether the Trump administration will continue these efforts, and while some Republicans regard Arévalo as a strong democratic ally, the migration issue, particularly the incoming Trump administration’s plans to deter and deport migrants, may be the topline item in the bilateral relationship.
To follow Guatemalan developments, Ana María recommends independent media including Plaza Pública, Con Criterio, and Prensa Comunitaria.
Download this podcast episode’s .mp3 file here. Listen to WOLA’s Latin America Today podcast on Apple Podcasts, Spotify, iHeartRadio, or wherever you subscribe to podcasts. The main feed is here."
From Promise to Pressure: Bernardo Arévalo’s First Year in Power in Guatemala - WOLA
In this podcast episode WOLA’s Central America Director, Ana María Méndez Dardón, reflects on Bernardo Arévalo’s first year in office, as January 14, 2025 marks one year since the inauguration that followed his unexpected election. As we discussed with Ana María in a podcast episode shortly...
www.wola.org
CRHeel94
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The challenges Arevalo has faced in his first year in Guatemala highlight the shortcomings of multi-party systems that we have seen in recent elections across Latin America. The multi-party system highly fragments the electorate: we've seen elections where the candidates that move to the run-off round get totals as in the high teens (Arevalo got 15.5% in the first round) . The more viable parties participate in the process, the lower the threshold. This results in two important roadblocks: 1) the candidates' party tends to have a small fraction in the Legislature, making it tough to get things done (much political capital is used in dealmaking), 2) even though the winning candidate in the runoff gets above 50%, there is little political mandate from the electorate. For most persons the winner was not their preferred candidate (in many cases, voters vote against someone in the second round).
The more elections I see with numerous parties, the more I see this pattern.
The more elections I see with numerous parties, the more I see this pattern.
BlooVooDoo
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I’m buying a case of mezcal before shit hits the fan.
donbosco
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In Guatemala City: "Servicio, Integridad, Profesionalismo"
https://x.com/DaphneV1989/status/1882943340972548337
https://x.com/DaphneV1989/status/1882943340972548337
donbosco
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But seriously...
www.worldpoliticsreview.com
I have no confidence whatsoever that the trump administration will do anything but create an atmosphere in which the Corrupt Pact will find it easier to return to full control in Guatemala -- oligarchs and criminals are the natural allies of the MAGA elite.
Guatemala’s Democracy Still Has a Chance, but It Needs U.S. Support
Arevalo could create a win-win scenario for the U.S. and Guatemala, but only if Trump avoids repeating his first-term mistakes.
www.worldpoliticsreview.com
I have no confidence whatsoever that the trump administration will do anything but create an atmosphere in which the Corrupt Pact will find it easier to return to full control in Guatemala -- oligarchs and criminals are the natural allies of the MAGA elite.
donbosco
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I see now that some folks may not be able to access that article (though you still could listen to the AI recording of it). Here it is in full:
"Guatemala’s Democracy Still Has a Chance, but It Needs U.S. Support
Benjamin N. Gedan
U.S. President Donald Trump inherited a lot of headaches in Latin America, from unprecedented migration to metastasizing organized crime. In Guatemala, however, reformist President Bernardo Arevalo presents a chance to shore up Central America’s largest economy, strike a blow against corruption and reduce migration. But to seize this opportunity, Trump will have to avoid repeating the costliest mistake he made in the region during his first term.
Getting Arevalo into office in Guatemala was former President Joe Biden’s biggest accomplishment in Latin America. Arevalo, a bookish former diplomat, unexpectedly finished first in the country’s crowded first-round presidential election in 2023. That set off a furious but unsuccessful campaign by a small but powerful group of conservative economic actors and corrupt judges and prosecutors to disqualify him and his Movimiento Semilla, or Seed Movement. Their crusade ramped up after Arevalo overwhelmingly defeated former first lady Sandra Torres in the second-round voting to win the presidency.
The Biden administration, with bipartisan support, played a leading role in defending Arevalo, using individual sanctions and travel bans on hundreds of Guatemalan lawmakers and oligarchs to keep him on the ballot. And after he won, Biden thwarted attempts to derail the six-month presidential transition, a campaign that Arevalo described as a “slow-motion coup.” The senior U.S. diplomat for Latin America warned that any moves to keep Arevalo from taking office would “be met with a strong US response.” Even so, his fate was uncertain until he was sworn in hours past schedule, amid a last-ditch effort to stop the inauguration.
The rare victory against the country’s business and political elites—known as the Pacto de Corruptos, or Pact of the Corrupt—thrilled many Guatemalans, including Indigenous communities, who had come out in force to protest on Arevalo’s behalf. Collectively, the country celebrated a primavera democratica, or democratic spring. The U.S. also reaped rewards. Strong democracies tend to be more reliable partners for Washington and U.S. investors, and less reliable partners for drug kingpins, and that has been the case in Guatemala. In September, the country resettled 135 Nicaraguan political prisoners after U.S. diplomats negotiated their release. The same month, it agreed to deploy 150 military police officers to Haiti to support a U.S.-funded mission to fight violent gangs there. Under Arevalo, Guatemala remains one of just 11 countries that has diplomatic relations with Taiwan, and it has joined the U.S. in condemning the electoral fraud committed by the Venezuelan regime in the country’s presidential election last July. Indeed, Arevalo met with Venezuelan opposition leader Edmundo Gonzalez in Guatemala City just last week.
Arevalo is also improving Guatemala’s economy. Last month, lawmakers approved his anti-monopoly reforms, and he has set his sights on investment-grade rating for the country’s debt.
So far, Trump has focused elsewhere in Latin America since winning the presidential election in November. He has threatened to impose a 25 percent tariff on imports from Mexico, and in early January, he refused to rule out the use of military force to seize the Panama Canal. But success in Guatemala should be of interest to the new administration, given its commitment to reduce migration. Fleeing crime, poverty and hunger at home, 724,000 undocumented Guatemalans now live in the U.S., representing 7 percent of the total unauthorized population, according to the Migration Policy Institute. U.S. border authorities detain more than 200,000 Guatemalans every year at the U.S.-Mexico border.
Good governance would reduce Guatemalan migration to the United States. So would greater U.S. private sector investment, which Washington supported during Trump’s first term with its America Crece program. Guatemalan authorities have also signaled a willingness to accept not only Guatemalan deportees, but also citizens of other countries removed by the Trump administration.
Even still, continued U.S. support for Guatemala is hardly guaranteed. At the start of Trump’s first term, Guatemala also appeared to be turning a corner, thanks to a U.S.-backed United Nations team of anti-corruption investigators and prosecutors, known as the International Commission against Impunity in Guatemala and referred to by its Spanish acronym, CICIG.
The U.N. established CICIG in 2007 to stamp out organized crime syndicates that had emerged from the wreckage of Guatemala’s 36-year civil war and thoroughly infiltrated its government. CICIG investigations led to the dismissal of 1,700 corrupt police officers, while also targeting senior public officials, lawmakers, judges and notorious drug traffickers. In 2015, its investigation into customs fraud led to the arrest and conviction of then-President Otto Perez Molina as well the country’s vice president. CICIG was Guatemala’s most trusted institution, and the U.S. was CICIG’s top financial backer. There was even talk of setting up a regional anti-corruption body to replicate Guatemala’s success in its troubled southern neighbors, El Salvador and Honduras.
Under Trump, however, Guatemala’s Pacto de Corruptos struck back. An investigation into campaign finance violations involving Perez Molina’s successor, former President Jimmy Morales, sparked a backlash against CICIG, and the U.S. failed to come to its defense. Morales shut down CICIG in 2019, with catastrophic consequences. Two years later, the Washington Office on Latin America catalogued a “dramatic downward spiral,” including crackdowns on journalists, activists and Indigenous leaders. Twenty-five judges and prosecutors fled the country, including two highly regarded former attorneys general, Claudia Paz y Paz and Thelma Aldana, who had prosecuted CICIG cases.
Trump also cut aid to Central America, a decision that further fueled Guatemalan migration."
Continued in next post...
"Guatemala’s Democracy Still Has a Chance, but It Needs U.S. Support
Benjamin N. Gedan
U.S. President Donald Trump inherited a lot of headaches in Latin America, from unprecedented migration to metastasizing organized crime. In Guatemala, however, reformist President Bernardo Arevalo presents a chance to shore up Central America’s largest economy, strike a blow against corruption and reduce migration. But to seize this opportunity, Trump will have to avoid repeating the costliest mistake he made in the region during his first term.
Getting Arevalo into office in Guatemala was former President Joe Biden’s biggest accomplishment in Latin America. Arevalo, a bookish former diplomat, unexpectedly finished first in the country’s crowded first-round presidential election in 2023. That set off a furious but unsuccessful campaign by a small but powerful group of conservative economic actors and corrupt judges and prosecutors to disqualify him and his Movimiento Semilla, or Seed Movement. Their crusade ramped up after Arevalo overwhelmingly defeated former first lady Sandra Torres in the second-round voting to win the presidency.
The Biden administration, with bipartisan support, played a leading role in defending Arevalo, using individual sanctions and travel bans on hundreds of Guatemalan lawmakers and oligarchs to keep him on the ballot. And after he won, Biden thwarted attempts to derail the six-month presidential transition, a campaign that Arevalo described as a “slow-motion coup.” The senior U.S. diplomat for Latin America warned that any moves to keep Arevalo from taking office would “be met with a strong US response.” Even so, his fate was uncertain until he was sworn in hours past schedule, amid a last-ditch effort to stop the inauguration.
The rare victory against the country’s business and political elites—known as the Pacto de Corruptos, or Pact of the Corrupt—thrilled many Guatemalans, including Indigenous communities, who had come out in force to protest on Arevalo’s behalf. Collectively, the country celebrated a primavera democratica, or democratic spring. The U.S. also reaped rewards. Strong democracies tend to be more reliable partners for Washington and U.S. investors, and less reliable partners for drug kingpins, and that has been the case in Guatemala. In September, the country resettled 135 Nicaraguan political prisoners after U.S. diplomats negotiated their release. The same month, it agreed to deploy 150 military police officers to Haiti to support a U.S.-funded mission to fight violent gangs there. Under Arevalo, Guatemala remains one of just 11 countries that has diplomatic relations with Taiwan, and it has joined the U.S. in condemning the electoral fraud committed by the Venezuelan regime in the country’s presidential election last July. Indeed, Arevalo met with Venezuelan opposition leader Edmundo Gonzalez in Guatemala City just last week.
Arevalo is also improving Guatemala’s economy. Last month, lawmakers approved his anti-monopoly reforms, and he has set his sights on investment-grade rating for the country’s debt.
So far, Trump has focused elsewhere in Latin America since winning the presidential election in November. He has threatened to impose a 25 percent tariff on imports from Mexico, and in early January, he refused to rule out the use of military force to seize the Panama Canal. But success in Guatemala should be of interest to the new administration, given its commitment to reduce migration. Fleeing crime, poverty and hunger at home, 724,000 undocumented Guatemalans now live in the U.S., representing 7 percent of the total unauthorized population, according to the Migration Policy Institute. U.S. border authorities detain more than 200,000 Guatemalans every year at the U.S.-Mexico border.
Ever since Trump’s victory in the U.S. presidential election, Arevalo’s opponents smell blood in the water. Trump should not make the same mistakes again, as it is in the U.S. interest to support Guatemala’s government.
Good governance would reduce Guatemalan migration to the United States. So would greater U.S. private sector investment, which Washington supported during Trump’s first term with its America Crece program. Guatemalan authorities have also signaled a willingness to accept not only Guatemalan deportees, but also citizens of other countries removed by the Trump administration.
Even still, continued U.S. support for Guatemala is hardly guaranteed. At the start of Trump’s first term, Guatemala also appeared to be turning a corner, thanks to a U.S.-backed United Nations team of anti-corruption investigators and prosecutors, known as the International Commission against Impunity in Guatemala and referred to by its Spanish acronym, CICIG.
The U.N. established CICIG in 2007 to stamp out organized crime syndicates that had emerged from the wreckage of Guatemala’s 36-year civil war and thoroughly infiltrated its government. CICIG investigations led to the dismissal of 1,700 corrupt police officers, while also targeting senior public officials, lawmakers, judges and notorious drug traffickers. In 2015, its investigation into customs fraud led to the arrest and conviction of then-President Otto Perez Molina as well the country’s vice president. CICIG was Guatemala’s most trusted institution, and the U.S. was CICIG’s top financial backer. There was even talk of setting up a regional anti-corruption body to replicate Guatemala’s success in its troubled southern neighbors, El Salvador and Honduras.
Under Trump, however, Guatemala’s Pacto de Corruptos struck back. An investigation into campaign finance violations involving Perez Molina’s successor, former President Jimmy Morales, sparked a backlash against CICIG, and the U.S. failed to come to its defense. Morales shut down CICIG in 2019, with catastrophic consequences. Two years later, the Washington Office on Latin America catalogued a “dramatic downward spiral,” including crackdowns on journalists, activists and Indigenous leaders. Twenty-five judges and prosecutors fled the country, including two highly regarded former attorneys general, Claudia Paz y Paz and Thelma Aldana, who had prosecuted CICIG cases.
Trump also cut aid to Central America, a decision that further fueled Guatemalan migration."
Continued in next post...
donbosco
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Cont.
"
The fight against the rule of law in Guatemala intensified under Morales’ successor, former President Alejandro Giammattei, who presided over the effort to keep Arevalo from taking office. Now, ever since Trump’s victory in the U.S. presidential election, Arevalo’s opponents smell blood in the water. Trump should not make the same mistake again, as it is in the U.S. interest to support Guatemala’s government.
If Washington takes its eye off Guatemala, it would bring a quick end to the country’s “democratic spring.” Having just celebrated his first anniversary in office on Jan. 15, Arevalo is still navigating ceaseless attempts to kneecap his government. Last month, Human Rights Watch denounced the country’s attorney general, Consuelo Porras, for “politically motivated prosecutions” against members of the government; Porras, who was sanctioned by the U.S. for “significant corruption,” is Arevalo’s archenemy, but in Guatemala, the president does not have the authority to appoint or fire the attorney general. The judiciary also remains problematic. In November, a court ordered newspaper publisher Jose Ruben Zamora, who had been granted house arrest pending trial in a case widely criticized by global press freedom organizations, to return to prison.
By backing Arevalo, the U.S. showed it still had the muscle to defend democracy in Latin America. Abandoning him would send a very different message: that the region’s lawbreaking businessmen and politicians need not reform, but simply wait out Washington’s sporadic anti-corruption campaigns.
Benjamin N. Gedan is director of the Latin America Program at the Woodrow Wilson International Center for Scholars. He also serves as an adjunct professor at Johns Hopkins University. He was formerly a South America director on the White House National Security Council during the Obama administration."
"
The fight against the rule of law in Guatemala intensified under Morales’ successor, former President Alejandro Giammattei, who presided over the effort to keep Arevalo from taking office. Now, ever since Trump’s victory in the U.S. presidential election, Arevalo’s opponents smell blood in the water. Trump should not make the same mistake again, as it is in the U.S. interest to support Guatemala’s government.
If Washington takes its eye off Guatemala, it would bring a quick end to the country’s “democratic spring.” Having just celebrated his first anniversary in office on Jan. 15, Arevalo is still navigating ceaseless attempts to kneecap his government. Last month, Human Rights Watch denounced the country’s attorney general, Consuelo Porras, for “politically motivated prosecutions” against members of the government; Porras, who was sanctioned by the U.S. for “significant corruption,” is Arevalo’s archenemy, but in Guatemala, the president does not have the authority to appoint or fire the attorney general. The judiciary also remains problematic. In November, a court ordered newspaper publisher Jose Ruben Zamora, who had been granted house arrest pending trial in a case widely criticized by global press freedom organizations, to return to prison.
By backing Arevalo, the U.S. showed it still had the muscle to defend democracy in Latin America. Abandoning him would send a very different message: that the region’s lawbreaking businessmen and politicians need not reform, but simply wait out Washington’s sporadic anti-corruption campaigns.
Benjamin N. Gedan is director of the Latin America Program at the Woodrow Wilson International Center for Scholars. He also serves as an adjunct professor at Johns Hopkins University. He was formerly a South America director on the White House National Security Council during the Obama administration."
donbosco
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Guatemala Aims for Quiet Coexistence with Washington
President Arévalo is betting on discreet cooperation and pragmatic engagement with the Trump administration.
www.americasquarterly.org
&&&&&&&&&&&&&&&&&&&&&&&&
And...MIRA!! El Pais with the follow-up...(PS, Also info on Panama disagreement, Salvadoran genuflection, Costa Rica, and the Dominican Republic.
Marco Rubio takes a victory lap on his first tour of Latin America
Panama, El Salvador, Costa Rica, Guatemala and Dominican Republic welcomed Trump’s representative with open arms. But before he left the region, the first disagreement had already emerged
"Meanwhile, in Guatemala, Bernardo Arévalo pledged to increase by 40% the number of deportee flights and to accept people of other nationalities.
I don’t think there was any discussion. It was simply something that the United States requested, and Guatemala said ‘Amen,’” says Marroquín, from Acción Ciudadana. “Now the Arévalo government has to rush to meet the minimum conditions, which it doesn’t have, to receive all these people and be able to offer them some kind of space so that they can look for job opportunities according to their background.
Among the agreements reached with Guatemala is a pledge to send a mission of U.S. Army engineers to expand the ports of the Central American country, a decision aligned with Washington’s objective of positioning itself in strategic places to counter China’s presence in the region.
In exchange, Arévalo received significant support from Rubio in his fight to defend democracy and fight corruption, his main campaign promise, which was met with strong resistance from sectors of the judiciary and the Attorney General's Office. For Marroquín, this message was one of the most important outcomes of the visit for Guatemala. "It is a watershed with the expectations that the 'Corrupt Pact' had that Trump's arrival would mean a retaking of power by them and weakening the Government, and it was quite the opposite," he says."
donbosco
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‘El Faro’ reporting on Bukele/trump: Bukele: A Jailer for Trump’s America
donbosco
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"Last Friday, President Milei promoted the $Libra cryptocurrency on his personal Twitter account. Thousands of people bought in, but the early owners sold, and the currency crashed. This sort of “rug pull” scam happens regularly online but usually does not occur using the social media account of a world leader.
Over the course of the coming weeks, we’ll learn more about the individuals behind $Libra. Milei has promised a full investigation. Lawyers, judges, and the Argentine Congress are all investigating. Articles of impeachment are being considered, though they are unlikely to move forward. International, crypto-obsessed tech journalists will dig deep into the event to identify exactly how it went wrong. I could have written about all that today, but I think the economic fallout is more interesting.
In modern politics, this sort of cryptocurrency scandal could have hit any country with a leader gullible enough to promote crypto on social media. But it hits differently in Argentina than it would anywhere else. Argentina’s stock market fell by over 5%. When Trump promoted a meme coin in the US and made money off the rug pull, it barely moved the media cycle for longer than a day. In contrast, the Milei scandal is the top news story in the local media, and that will stick for days, if not weeks, to come.
Why? I would argue that the scandal resonates in part because Argentina’s economy is based around a currency that functions much like a meme coin.
To live and work in Argentina is to have the equivalent of a PhD in theoretical economics where wacky things happen. Prior to this scandal, the entire country had been awaiting news of a potential IMF deal to prop up the peso for a few more months while currency controls are dropped. People across Argentina use the peso to buy and sell while believing that the price may some day drop to zero. The country’s history means the population understands what it’s like to have a currency crash and to regularly use a currency with an ephemeral value in a way that few others do.
That means the country is more primed to understand crypto than any other country on Earth. There are crypto ads all over Buenos Aires because using crypto makes sense in a place where the local markets are illogical. Over the past decade, there have been months of economic crisis when Bitcoin and Ethereum prices have been more stable than the Argentine peso. Doubts about the peso make the country one of the biggest users in the world of Tether, a stablecoin linked to the US dollar.
Milei implicitly understood that Argentina’s peso lacked real value while campaigning in 2023. His promises of dollarization were well-received in a country where people experiment with crypto as a potential safety net and quietly hoard dollars awaiting the next peso crash. When he threatened to use a chainsaw on the Central Bank, citizens only paused to wonder whether he meant it figuratively or literally, not whether it was a good idea.
Given that a majority of voters endorsed Milei’s unorthodox economic proposals when they voted in 2023, I don’t think Milei will be impeached over this scandal. Whether this scandal impacts his popularity by more than a few points depends on how he responds to the allegations of corruption - how close he was to the backers of the meme coin and whether he profited from it - not the fact that he promoted something like this online. The immediate impact will also be limited by the fact that more foreigners bought into the coin than Argentines.
Instead, due to everything I wrote above, I think the real impact of $Libra could be an acceleration of dropping currency controls on the peso and potentially moving towards dollarization. Instead of being tamed by the scandal, the president is going to see the rise and fall of the meme coin as a signal of market demand for him to do something radical but real. It will convince him to press forward and demonstrate that he can deliver the solutions that his voters want.
The idea that this scandal pushes currency reforms and even dollarization rather than slowing it down is counterintuitive. This is a scandal that would cause most politicians to take a breather. But Argentina’s president is Javier “Viva La Libertad Carajo” Milei. He’s going to do the opposite of what a normal politician might do because he’s generally been rewarded when he has in the past.
Milei was supposed to travel this week to the United States to meet with President Trump and try to get support for an IMF package that will back his efforts to drop currency controls. Last week, I wrote in World Politics Review that Milei is using Argentina’s giant debt with the IMF to obtain leverage in those negotiations. Milei will not be deterred from pressing forward and considering even more radical solutions. What should now concern the IMF is that Milei’s next announcement on social media will pull the rug on Argentina’s peso."
boz.substack.com
Over the course of the coming weeks, we’ll learn more about the individuals behind $Libra. Milei has promised a full investigation. Lawyers, judges, and the Argentine Congress are all investigating. Articles of impeachment are being considered, though they are unlikely to move forward. International, crypto-obsessed tech journalists will dig deep into the event to identify exactly how it went wrong. I could have written about all that today, but I think the economic fallout is more interesting.
In modern politics, this sort of cryptocurrency scandal could have hit any country with a leader gullible enough to promote crypto on social media. But it hits differently in Argentina than it would anywhere else. Argentina’s stock market fell by over 5%. When Trump promoted a meme coin in the US and made money off the rug pull, it barely moved the media cycle for longer than a day. In contrast, the Milei scandal is the top news story in the local media, and that will stick for days, if not weeks, to come.
Why? I would argue that the scandal resonates in part because Argentina’s economy is based around a currency that functions much like a meme coin.
To live and work in Argentina is to have the equivalent of a PhD in theoretical economics where wacky things happen. Prior to this scandal, the entire country had been awaiting news of a potential IMF deal to prop up the peso for a few more months while currency controls are dropped. People across Argentina use the peso to buy and sell while believing that the price may some day drop to zero. The country’s history means the population understands what it’s like to have a currency crash and to regularly use a currency with an ephemeral value in a way that few others do.
That means the country is more primed to understand crypto than any other country on Earth. There are crypto ads all over Buenos Aires because using crypto makes sense in a place where the local markets are illogical. Over the past decade, there have been months of economic crisis when Bitcoin and Ethereum prices have been more stable than the Argentine peso. Doubts about the peso make the country one of the biggest users in the world of Tether, a stablecoin linked to the US dollar.
Milei implicitly understood that Argentina’s peso lacked real value while campaigning in 2023. His promises of dollarization were well-received in a country where people experiment with crypto as a potential safety net and quietly hoard dollars awaiting the next peso crash. When he threatened to use a chainsaw on the Central Bank, citizens only paused to wonder whether he meant it figuratively or literally, not whether it was a good idea.
Given that a majority of voters endorsed Milei’s unorthodox economic proposals when they voted in 2023, I don’t think Milei will be impeached over this scandal. Whether this scandal impacts his popularity by more than a few points depends on how he responds to the allegations of corruption - how close he was to the backers of the meme coin and whether he profited from it - not the fact that he promoted something like this online. The immediate impact will also be limited by the fact that more foreigners bought into the coin than Argentines.
Instead, due to everything I wrote above, I think the real impact of $Libra could be an acceleration of dropping currency controls on the peso and potentially moving towards dollarization. Instead of being tamed by the scandal, the president is going to see the rise and fall of the meme coin as a signal of market demand for him to do something radical but real. It will convince him to press forward and demonstrate that he can deliver the solutions that his voters want.
The idea that this scandal pushes currency reforms and even dollarization rather than slowing it down is counterintuitive. This is a scandal that would cause most politicians to take a breather. But Argentina’s president is Javier “Viva La Libertad Carajo” Milei. He’s going to do the opposite of what a normal politician might do because he’s generally been rewarded when he has in the past.
Milei was supposed to travel this week to the United States to meet with President Trump and try to get support for an IMF package that will back his efforts to drop currency controls. Last week, I wrote in World Politics Review that Milei is using Argentina’s giant debt with the IMF to obtain leverage in those negotiations. Milei will not be deterred from pressing forward and considering even more radical solutions. What should now concern the IMF is that Milei’s next announcement on social media will pull the rug on Argentina’s peso."
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