Horacio Cartes.jpgElections & Institutions 

Shutting Dirty Money out of Paraguay’s Political Campaigns

By Sebastián Acha 

Next April, Paraguay will hold an election to replace the sitting president, tobacco magnate Horacio Cartes. Cartes’s vertiginous rise was unusual in the political history of Paraguay: In 2013, he became the first citizen to take office without ever having voted after he changed the statues of the right-wing Colorado Party with the support of the party’s former leaders. The country looked on with amazement as he poured unprecedented amounts of money into the election, promising wealth without work, welfare without sacrifice, and development without effort.

Unless there are significant changes in the near future, this kind of “populism” by the rich will become business as usual in Paraguayan politics. Furthermore, it promises to fuel deeper anti-democratic trends by degrading trust in political parties, and forcing candidates to seek alternate sources of funding, often from illicit organizations.

Since Cartes, candidates have been expected to spend massive amounts of money on political campaigns. Unfortunately, the existing campaign finance regulations make it almost impossible to run for office—or fundraise legally—unless the candidate is already wealthy. If a prospective politician wants to compete against an official party candidate who is already receiving public funds, that person would need to find their own funding. Because aspiring politicians are considered “politically exposed persons,” they are legally forbidden from receiving bank credit, which makes it extremely difficult for them to fundraise.

So where does the money usually come from? According to studies carried out by the Pro-Development Association of Paraguay, the country’s underground economy accounts for 39.6 percent of its GDP, and drug trafficking is believed to account for almost a third of that. There is no law requiring political campaigns to reveal the sources of their donations. This, in turn, has generated a system in which campaign donations are exchanged for political favors—namely, protection for illegal trafficking. Between 2013 and today, the number of congressmen who have been implicated in drug trafficking investigations has risen from three to seven, and this doesn’t include local authorities. As the Salvadoran politician Gerard Le Chevallier once said, “politicians need money for campaigns and if it isn’t given to them, they will find a way to get it.”

The increase in campaign spending has coincided with a decline in public support for the government. A recent study funded by the National Council of Science and Technology revealed that the Paraguayan People’s Army—a “small-scale FARC” involved in drug trafficking—delivers between $200 and $500 a month to poor families to help pay for education and basic needs. This “parallel subsidy” has been driven by the absence of basic state services, and the fact that citizens place so little trust in government. In a country with so much inequality—Paraguay has a ranking of 48.01 percent in the World Bank GINI Index—it is common to hear people wonder why they should give money to political parties that don’t represent their interests. Why not buy milk, or build schools or homes instead?

The upcoming national elections are a turning point for the future of Paraguay and the country’s stability. The result could mean the integration of big drug gangs into the structures of power, or it could put an end to dirty money in campaigns.

If they choose to, congress and the leaders of political parties could clean up the system with two measures: first, by approving and executing a law that regulates campaign donations by limiting the amount individuals can give, and requiring that they disclose their identities. Second, leaders could approve and execute a law that regulates how much advertisers can charge for political advertising space (which would prevent discrimination against candidates who do not have unlimited funds), and which allocates ad space to parties based on the percentage of seats they hold in congress.

Maybe the most important reform would be to rehabilitate the Supreme Court by eliminating partisanship and granting real independence to all the country’s judges. Right now, the judicial system is compromised. There have been many judgments that arbitrarily favored people linked to drug trafficking, or rescinded drug-related convictions, or allowed people persecuted by foreign justice systems to leave the country.

Paraguay’s political leadership has the opportunity to take a step toward transparency or to follow other, more depressing recent examples. One such case would be Colombia in the eighties, when “narcos” effectively ruled the country, and violence was widespread. Once politicians and police were willing to be bought off by anybody with the highest bid, in the words of Colombian writer Juan Gustavo Cobo Borda, “politics corrupted drug trafficking.” Paraguay can—and must—do better.



Sebastián Acha is the executive director of PRO Desarrollo Paraguay, an association dedicated to promoting an equitable and transparent business environment in Paraguay.

[Photo courtesy of Agencia de Noticias ANDES]

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