Former Paraguayan President Finds Himself on Wrong Side of US Power

In early August, the US Treasury Department quietly approved the tobacco company of former Paraguayan President Horacio Cartes.

Before taking office, Cartes had extensive ties to organized crime and took authoritarian measures while in power. However, Cartes faced no public pressure from the U.S. government until long after he left office in 2018. U.S. leaders looked the other way for so long because Cartes was serving their mutual interests.

Cartes served from 2013 to 2018 in the right-wing Colorado Party, which, apart from one term as leader of the opposition party that ended in a “parliamentary coup d’étathas held the presidency since 1948. This includes the 34 years of terror led by US-backed dictator Alfredo Stroessner. Cartes is still the head of the party.

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

During his tenure, Cartes was a conservative counterweight to some of the region’s liberal leaders. Paraguay is also a ardent supporter of Taiwan for decades. It is the only country in South America that has diplomatic relations with Taiwan.

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

Honduras became the first country to be ruled by former President Juan Orlando Hernandez fourth country to move his embassy to Jerusalem. Hernandez, who is now a 45 years in prison in prison for drug trafficking in the United States, has a political career that bears a striking resemblance to that of Horacio Cartes. Both men had well publicized criminal connectionsand neither was given US power until they left office.

To most Americans, Horacio Cartes is an obscure foreign leader. But for decades, the governments of Central and South America have identified his tobacco company, Tabesa, as the largest owner of black-market cigarettes in their countries. In Colombia, for example, a governor sued Tabesa over a loss of $67 million in annual tax revenues.

The plan is simple. His company produces about seven times Paraguay’s entire domestic demand for cigarettes with brands not licensed in neighboring countries is contained in a factory ten miles from the porous tri-border region of Argentina and Brazil, an area notorious for all manner of illicit trade.

Cartes’ company claims that in 16 years it has legally exported more than a billion cigarettes to Bulgaria, Curacao, the Netherlands Antilles and the Netherlands. These countries has not imported a single cigarette from Paraguay during that period. It is a clear warning sign of illegal smuggling.

This contraband is a major source of income for drug cartels, organized crime syndicates and narco-terrorists, such as the Sinaloa CartelBrazil’s PCCthe FARC in Colombia, and HezbollahIt’s the kind of behavior that would give rise to criminal charges, such as Nicholas Maduro would be confronted if Cartes were to find himself in those same socialist circles.

Cartes has never shown remorse for his part in the scam. In 2012, he publicly dodged responsibility by claiming that smuggling was a “customs issue.” A few years earlier his CEO was even more brazen when he claimed that “we don’t know where our cigarettes are consumed, and that’s not our problem.”

Cartes has also been suspected of drug crimes for more than two decades. Cartes’ uncle, a lifelong drug dealer, was arrested in Uruguay with 478 kilos of marijuana a few months before the election. It is part of a trend. Paraguayan authorities took 20 kilos of cocaine and 343 kilos of marijuana on Cartes’ ranch in 2000. He was not arrested. Cartes later claimed it was a coincidence that the pilot of the plane had chosen his property via an emergency landing.

WikiLeaks published a document from 2007 that revealed a conversation between Paraguay’s top anti-drug official and the U.S. embassy’s deputy chief of mission. The U.S. official was told that “80 percent of money laundering in Paraguay goes through (Cartes’ bank).” WikiLeaks released another document from 2010 that implicated Cartes as the prime suspect in a DEA money laundering operation research.

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

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

The main beneficiaries of this repression are Paraguay’s economic elite, along with multinational corporations, including US-based Cargill and Archer Daniels Midlandwho receive the huge quantities of soy and beef from Paraguay.

Cartes took the first steps toward re-establishing a dictatorship, including using police resources to suppress small opposition groups radio stationsHis sister’s company also bought a large media conglomerate, Group Country.

His most shameless 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. Protesters responded by storming the Congress building fireworkWithin hours, police raided the headquarters of the main opposition party and one of their activists was killed with a shot to the head.

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

That said, a State Department designation is largely symbolic. The penalty is a U.S. visa restriction.

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

In interesting timing, the US Treasury Department was the first approved Cartes the following month. That tactic is much more drastic. It blocks anyone in the U.S. from doing business with that person. The Treasury Department alleged that Cartes offered a $1 million bribe to lawmakers who tried to give him a second term. “Cartes continued to influence legislative activity after he left office, targeting political opponents and bribing lawmakers to sway votes in his favor, with top supporters receiving as much as $50,000 a month,” the Treasury Department said.

Cartes certainly deserves such punishments, but the timing stinks of a politicized use of sanctions. After all, America has designated 26 countries and about 15,000 people/companies under sanctions. So it is not a tool that it does not like to use.

If actions speak louder than words, the U.S. government indicated that it was prepared to let Cartes ride off into the sunset unscathed. However, when he re-emerged into the political sphere, it suddenly became a bridge too far and every punitive measure at Washington’s disposal was brought to bear against him.