From EL FARO ENGLISH: Bukele Wants Us to Talk About Bitcoin

Jun 8, 2021
1:26 PM

Salvadoran President Nayib Bukele (AP Photo/Salvador Meléndez, File)

Welcome to El Faro English.

Secretary of the OAS, Luis Almagro, issued a scathing statement Monday morning against the government of El Salvador, accusing President Nayib Bukele of having tried to use the International Commission against Impunity in El Salvador (CICIES), an international advisory and monitoring commission against corruption and impunity created in 2019, as a weapon against the opposition.

The administration, through the Nuevas Ideas-appointed Attorney General Rodolfo Delgado, sought to “impede advances in investigations into reports of corruption in the current administration,” wrote Almagro, making the fight against corruption “more of a rhetorical effort than a political and ethical objective.”

These disagreements and others, such as the May 5 law granting impunity to public officials for pandemic-related spending, led the OAS to inform both its donors and the Bukele administration that the commission’s work was unsustainable, Almagro said.

It’s the latest chapter of a relationship that began on near-idyllic terms but has turned fraught and finally unsustainable. The government of El Salvador announced on Friday it would pull out of its agreement to cooperate with the CICIES, which since 2020 had been investigating high-level corruption in Bukele’s government.

The decision drew swift condemnation from a range of actors, both national and international, including the U.S. Embassy and U.S.legislators.

The news was temporarily drowned out, however, by President Bukele’s flashy announcement on Saturday that he is seeking to make Bitcoin an official national currency—the first-ever country to do so.

Analysts have rushed to try to understand the motive behind his jump into cryptocurrency: Is it a bold leap into the future of finance, a shield from possible sanctions from the U.S. Treasury Department, a way to attract international investment, or a planned distraction from other political controversies?

The reason remains unclear against an increasingly complex political and economic backdrop in El Salvador. Not only is there serious concern that Bukele currently controls the three branches of government, but that he has effectively announced a “new battle” against both civil society and the press.

Another major question surrounding Bukele’s administration has been whether they are planning to break away from the U.S. dollar, the national currency since 2001, to give the central bank control over its own currency supply as government debt and spending continue to increase. In May, the national debt surpassed a towering 90 percent of gross domestic product.

The administration is looking to refinance that debt with the International Monetary Fund —a negotiation in which the U.S. Treasury and State Departments play a significant role— to secure lower interest rates and longer-term repayment.

But the negotiations face a rocky and uphill climb. Since the legislative coup on May 1, Bukele and his party have distanced themselves not only from the Biden administration, but from the European Union and international human rights organizations that are increasingly suspicious both of Bukele’s respect for the rule of law and his administration’s commitment to rooting out corruption.

As Bukele decided to stop cooperating with the CICIES, he accused the OAS of “political bias” and said the international community was guilty of “hypocrisy” for condemning his supposed authoritarianism.

The Bukele administration cited the incorporation of former mayor of San Salvador, Ernesto Muyshondt of the right-wing opposition party ARENA, as an OAS advisor as their motive for terminating the agreement. Muyshondt has been facing charges of electoral fraud and illicit association related to allegations that he negotiated with gangs before 2014 elections.

Many politicians in El Salvador have faced similar allegations, including, as El Faro investigations have revealed, Bukele and other high-level officials in his administration.

“Anyone seeing this knows that the OAS has no intention to fight impunity in El Salvador and that, therefore, anything they do suffers from that vice,” Bukele said about the Muyshondt announcement in a Friday night press conference. “We’re going to look for an international organization we can trust. We made the mistake of trusting the OAS, without a doubt.”

At the time of the announcement, the Attorney General’s office —with the support of CICIES— was investigating at least 12 cases of corruption against Bukele administration officials. The future of these investigations is unclear. As El Faro reported on Saturday, the OAS confirmed in its communication today that the supposed naming of Muyshondt is symbolic and Muyshondt does not —and will not— have a contract with the organization.

The creation of the CICIES fulfilled a major campaign promise, but doubts about Bukele’s commitment to a truly autonomous anti-corruption body emerged soon after he took office in June 2019 when he opted for an OAS proposal that CICIES not have the investigative powers or the ability to press charges, rejecting a UN proposal for a commission with more robust investigative and prosecutorial powers.

To ensure the CICIES’ independent role, civil society organizations pushed earlier this year for a law to ensure Salvadoran institutions cooperate with the CICIES and could not try to sway the commission’s investigation. Bukele openly scorned the law, which was never passed.

The National Civil Police placed Muyshondt under house arrest the day of Bukele’s press conference. Muyshondt told the press that he believes his arrest is politically motivated. Some of Bukele’s critics have been harassed by authorities in recent weeks since Bukele’s party took control of the National Assembly, and checks and balances on executive power have been eliminated.

Harris Visit to Guatemala

Vice President Kamala Harris arrived in Guatemala on Sunday as part of her first international trip as vice president. President Joe Biden put her in charge of the administration’s efforts to fight corruption and curb migration from the region. It remains unclear if the Biden administration will take action in El Salvador after the decision to revoke the CICIES.

Harris met with President Giammattei Monday before continuing on to Mexico to meet president Andrés Manuel Lopez Obrador Tuesday.

The White House is already working to temper expectations of the visit, stressing that the administration needs willing partners in the region in order for its anti-corruption efforts to bear fruit.

Harris is visiting neither El Salvador nor Nicaragua on this trip, countries where anti-democratic setbacks have been most blatant in recent weeks. In Nicaragua, the government of Daniel Ortega has detained two opposition candidates, Cristiana Chamorro and Arturo Cruz, ahead of elections scheduled for November.

Chamorro was placed under house arrest on June 2 and faces charges of money laundering, which she and opposition leaders have said are an attempt to delegitimize her campaign. Cruz, a former Nicaraguan Ambassador to the United States, was arrested by the National Police upon arrival at the airport in Managua Saturday for alleged “indications that he has attacked Nicaraguan society and the rights of the people.”

The State Department and the European Union called for the immediate release of Chamorro, who the Ortega government has barred from participating in elections. For more background on the situation in Nicaragua, read our recent newsletter.

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