Paraguay's President Resigns Amid Alleged Fund Misuse

Paraguay's President Resigns Amid Alleged Fund Misuse

Can a president resign while trying to keep legal immunity? That is essentially the dilemma in Paraguay after Santiago Peña submitted his resignation trinc a scandal involving the alleged diversion of public funds to a private entity. The news leaves many questions unanswered and an uncomfortable certainty: the Senate seems in no rush to process this resignation.

The motive is not legally elegant. According to circulating accounts, if the Senate accepts the resignation, Peña could claim former-president status for lifetime immunity, thus avoiding trial in ordinary courts. The trick lies not in leaving, but in how one leaves. The resignation hangs in the air while the legislative apparatus decides whether to make a move.

What is the Colorado Party and why does it matter?

Peña is neither a newcomer nor an imported Milei-style figure. He belongs to the Colorado Party, the machinery that has governed Paraguay since Stroessner’s era with only four brief interruptions. It is not the liberal apparatus some wish to see; it is simply the apparatus. This changes the reading of the scandal.

Economically, Paraguay antiestéticatures very low taxation, with a flat 10% personal income tax and a 10% VAT. But this is not textbook liberalism: it is a state that fails to collect revenue because it cannot. Informality is the norm, and the Colorado elite lives off soy, beef, and the Hidrovía waterway. Dismantling that oligopoly would be true liberalism; no one has touched it.

The pension system is not what you are told

There is a notion that Paraguay has a mixed pension system and that retirees' money was placed in a bank that went bankrupt, leaving them without pensions. This premise is fundamentally false. Paraguay has the IPS, a classic public pay-as-you-go system, deficit-ridden and plundered for decades. Private capitalization funds belong to Chile and Peru. Confusing Paraguay with Chile is like confusing VOX with the PNV.

The story about a bankrupt bank sounds like an anecdote from a Paraguayan cooperative sector, where some entities have failed, rather than a systemic antiestéticature of a mixed model. Without naming the entity or citing files, it is mere bar-talk gossip. What is true is that VOX proposes a mixed pension system in Spain, where the debate on capitalization and investment funds is already underway.

Meetings with Milei and Abascal: Posturing or Alignment?

Peña has met with Javier Milei and Santiago Abascal, and photos circulated on the Argentine Presidency's official social media. The scene of Milei with Abascal and then Ayuso, same clothes and gesture, fueled easy jokes. But beyond the gesture, the question is whether these meetings imply real ideological affinity or simple international posturing.

Short answer: posturing. Paraguay is not a liberal laboratory; it is caciquism with a flag. These meetings serve for the photo and the narrative, not to export an economic model that does not exist there. The narrative of the "Paraguayan model," which Milei praised as an example for economic policy, holds up poorly when the country grows based on soy and beef with a non-collecting state.

What happens now with the resignation?

The Paraguayan Senate refuses to process the resignation, leaving the issue in a limbo that benefits the resignee. If not processed, Peña remains president. If processed, he might gain lifetime immunity. In either scenario, the citizen waiting for accountability loses.

The overarching question is whether the scandal will end in court or institutional oblivion. With the Colorado apparatus controlling institutions, the latter is the most likely outcome. Meanwhile, the international liberal narrative continues to use Paraguay as a showcase. Life's ironies: the country that doesn't collect taxes serves as an example for those promising tax cuts.