Ex-Paraguay prez finds himself on wrong side of US power

In early August, the U.S. Treasury quietly sanctioned the tobacco company of Paraguay’s former president, Horacio Cartes.

Before entering office, Cartes had extensive links to organized crime and took authoritarian actions while in power. However, Cartes faced no public pressure from the American government until long after leaving office in 2018. America’s leadership looked the other way for so long because Cartes fulfilled its mutual interests.

Cartes served from 2013 to 2018 in the right-wing Colorado Party which, other than one term of opposition party leadership that ended in a “parliamentary coup,” has held the presidency since 1948. That includes the 34-year reign of terror led by the U.S.-supported dictator, Alfredo Stroessner. Cartes remains the head of the party today.

The Colorado Party’s foreign policy goals parallel the United States’s initiatives. For example, then-Secretary of State, Mike Pompeo, praised Paraguay as one of the leaders of the Lima Group coalition that fell in line with the U.S. recognition of Juan Guaidó as Venezuela’s unelected leader in 2019.

While in office, Cartes was a conservative counterbalance to some of the liberal leaders of the region. Paraguay has also been a staunch supporter of Taiwan for decades. It’s the only country in South America that has diplomatic relations with Taiwan.

Cartes was so firm in his support of Israel that he made Paraguay the third country (after the United States and Guatemala) to move its embassy from Tel Aviv to Jerusalem. It was a controversial decision that sparked protests because Palestinians view East Jerusalem as their future capital.

Honduras, under the leadership of former President Juan Orlando Hernandez, became the fourth country to move its embassy to Jerusalem. Hernandez, who is now serving a 45-year sentence in U.S. prison for drug trafficking, has a political career with remarkable similarity to Horacio Cartes. Both men had well-publicized criminal connections, and neither faced the bully pulpit of the U.S. until after leaving office.

For most Americans, Horacio Cartes is an obscure foreign leader. However, Central and South American governments have singled out his tobacco company, Tabesa, for decades as the biggest proprietor of black-market cigarettes in their countries. For example, a governor in Colombia sued Tabesa alleging a loss of $67 million in annual tax revenue.

The scheme is simple. His company produces roughly seven times Paraguay’s entire domestic demand for cigarettes with brands that aren’t licensed in the neighboring countries in a factory ten miles from the porous tri-border region with Argentina and Brazil. This area is notorious for all sorts of illicit trafficking.

Cartes’s company claims to have legally exported over a billion cigarettes over 16 years to Bulgaria, Curaćao, the Netherlands Antilles, and the Netherlands. However, those countries didn’t report a single cigarette imported from Paraguay during that period. It’s an obvious red flag for illegal smuggling.

This contraband is a significant source of income for drug cartels, organized crime syndicates, and narco-terrorists, such as the Sinaloa Cartel, Brazil’s PCC, the FARC in Colombia, and Hezbollah. It's the kind of conduct that would elicit criminal charges, like what Nicholas Maduro has faced if Cartes roamed in those same socialist circles.

Cartes has never shown contrition for his part in this racket. In 2012, he publicly deflected responsibility by stating that smuggling is a “customs issue.” A few years earlier, his CEO was more brazen asserting that “(w)e don’t know where our cigarettes are consumed, and it’s not our problem.”

Cartes has also been suspected of drug offenses for over two decades. Cartes’s uncle, a lifelong trafficker, was arrested in Uruguay with 478 kilos of marijuana a few months before being elected. It’s part of a trend. Paraguayan authorities seized 20 kilos of cocaine and 343 kilos of marijuana on Cartes’s ranch in 2000. He wasn’t arrested. Afterward, Cartes claimed it was a coincidence the plane’s pilot chose his property through an emergency landing.

WikiLeaks published a document from 2007 that disclosed a conversation between Paraguay’s top counternarcotics official and the U.S. Embassy Deputy Chief of Mission. That U.S. official was told that “80 percent of money laundering in Paraguay moves through (Cartes’s bank).” WikiLeaks released another document from 2010 revealing that Cartes was the top suspect in a DEA money laundering investigation.

A man with this background had a predictably horrible human rights record as president. Paraguay’s history is marred with violent illegal evictions of peasants which, in part, caused the country to have one of the worst distributions of land ownership in the world. Ninety percent is owned by less than 1% of the population.

Cartes’s administration continued a long-term trend of Paraguay using state-sponsored violence against people protesting for their land rights. Thousands of these activists have been imprisoned and 128 assassinated since the Stroessner dictatorship ended in 1989, according to Global Witness.

The prime benefactors of this repression are the Paraguayan economic elite, along with multinational corporations, including U.S.-based Cargill and Archer Daniels Midland, which receive Paraguay’s massive soy and beef exports.

Cartes took the beginning steps towards reestablishing a dictatorship, including using police resources to shut down small opposition radio stations. His sister’s company also purchased a large media conglomerate, Grupo Nación.

His most brazen act was arranging a special session of Congress in March 2017 to allow him to run for another term, which was banned by the constitution in 1992. Protestors reacted by setting the congressional building on fire. Within hours, police raided the leading opposition party headquarters and one of their activists was killed with a shot in the head.

The U.S. government took no official action against Cartes until four years after leaving office. The U.S. State Department slapped him with a corruption designation in July 2022. The press release declared that “Cartes obstructed a major international investigation into transnational crime in order to protect himself and his criminal associate from potential prosecution and political damage.” His vice president and legal counsel were also designated for corruption a month later.

With that said, a designation by the State Department is mostly symbolic. The penalty is a U.S. visa restriction.

In December 2022 Cartes was elected the chairman of the Colorado Party. His protégé, Santiago Peña, won the Colorado Party presidential nomination that same month. Peña, who served as the finance minister under Cartes, had his campaign financed by Cartes.

With interesting timing, the U.S. Department of Treasury first sanctioned Cartes the following month. That tactic is much more punitive. It blocks anyone in the U.S. from doing business with that individual. The Treasury alleged that Cartes offered a $1 million bribe to the legislators who attempted to allow him a second term. “Cartes continued to influence legislative activities after leaving office, targeting political opponents, and bribing legislators to direct votes in his interest, with top supporters receiving as much as $50,000 monthly,” according to the Treasury.

Cartes is certainly deserving of such penalties, but the timing reeks of a politicized use of sanctions. After all, America currently has designated 26 nations and roughly 15,000 individuals/corporations under sanctions. Therefore, it’s not a tool that it is reluctant to use.

If actions speak louder than words, the U.S. government signaled that it was willing to allow Cartes to ride off into the sunset unscathed. However, when he re-emerged in the political sphere, it suddenly became a bridge too far and all the punitive tools at Washington’s disposal are bring brought to bear against him.