Boost for Paraguay’s Cartes as US lifts sanctions
The US government has lifted sanctions on Paraguay’s former president Horacio Cartes (2013-2018). The sanctions were applied under the previous US administration led by Joe Biden (2021-2025). However, the current government of President Donald Trump appears to be taking steps to ease the pressure on Cartes, who is the current party president of the ruling Asociación Nacional Republicana-Partido Colorado (ANR-PC). Opposition lawmakers in Paraguay have claimed that the government of President Santiago Peña, who is considered a political protégé of Cartes, has acted like a “lackey” of the US. The opposition has suggested that the lifting of the sanctions could be a reward for Paraguay’s cooperation and alignment with the Trump administration. President Peña has denied these accusations of lobbying the US government on behalf of his mentor.
The US State Department designated Cartes in 2022 for involvement in “significant corruption”, and in 2023 the US Treasury Department’s Office of Foreign Assets Control (Ofac) imposed sanctions on Cartes and several of his companies. On 6 October Ofac announced updates to its counter-terrorism and counter-narcotics designation list, removing Cartes and several of his companies from its specially designated nationals (SDN) list.
“I extend recognition to the government of the United States, led by President Donald Trump, for having acted with objectivity and a sense of justice in reviewing all the relevant circumstances and the merits of my defence,” Cartes stated on 6 October, adding that he hoped “to contribute to strengthening the historic friendship between Paraguay and the United States.”
Ofac sanctioned Cartes, a billionaire tycoon, and companies that he owned or controlled - Tabacos USA Inc., Bebidas USA Inc., Dominicana Acquisition S.A., and Frigorifico Chajha S.A.E - on 26 January 2023, blocking them from the US financial system. On 31 March 2023 Ofac also identified Paraguay’s largest cigarette manufacturer, Tabacalera del Este SA (Tabesa), as being owned by Cartes. Although Cartes had since sold his controlling stake in Tabesa, Ofac announced on 6 August 2024 that it would sanction the company on the grounds that it was continuing to provide financial support to Cartes.
According to the January 2023 press release in which Ofac announced the sanctions, Cartes’ political career was “founded on and continues to rely on corrupt means for success”. It alleged that he paid members of the ANR-PC to support his candidacy ahead of the 2013 presidential election. During his presidency, Ofac alleged that Cartes continued corrupt schemes, including making cash bribes to officials in exchange for their loyalty and support. Ofac also stated that Cartes pledged US$1m of his own wealth in 2017 to bribe lawmakers to back his unsuccessful push for constitutional reform, which it said would have allowed him to run for a second term in 2018.
Another reason for the sanctions were Cartes’ alleged ties to the Lebanese militant group Hezbollah, which is designated as a terrorist organisation by both the US and Paraguay. Ofac said that Hezbollah regularly held events in Paraguay where politicians could make agreements for favours, sell state contracts, and discuss law enforcement efforts – events allegedly attended by representatives of Cartes. According to specialist website Insight Crime, Cartes has also been accused of financing deals between Hezbollah and the Primeiro Comando da Capital (PCC), one of the most powerful Brazilian criminal organisations which operates in Paraguay and other South American countries.
Despite the US pressure, Cartes became the national party president of the ANR-PC on 10 January 2023, and his former finance minister Peña (2015-2017) would go on to win the presidential election in April 2023. The Cartista Honor Colorado (HC) faction of the ruling ANR-PC has dominated the current government. In addition to President Peña, several other high-ranking government officials have close ties to Cartes. The current interior minister, Enrique Riera, served in Cartes’ cabinet as the minister for education and culture (2016-2018), while the current economy and finance minister, Carlos Fernández Valdovinos, served as the president of the central bank during Cartes’ presidency, before serving on the board of Banco Basa, a private bank which used to be owned by Cartes.
Given the influence that Cartes holds in the ANR-PC, opposition figures have suggested that the Peña administration must have carried out “intense lobbying” to convince the US the drop the sanctions. On 6 October Senator Ever Villalba, a member of the main opposition Partido Liberal Radical Auténtico (PLRA), said that “this was a win-win agreement”. However, on 16 October President Peña said that his government was not behind any lobbying effort. He insisted the US government “made a unilateral decision to remove [Cartes] from the list”, adding that Cartes’ legal situation is “not a point on the bilateral agenda”.
Although the opposition has not provided clear evidence of a quid-pro-quo deal between the Peña and Trump administration, it is true that the Paraguayan government has been signalling closer alignment with the US in recent months. In mid-August, Paraguay’s Foreign Minister Ruben Ramírez travelled to Washington to meet with US Secretary of State Marco Rubio and sign an agreement which the State Department has described as a Safe Third Country Agreement (STCA). Ramírez was cited in the Paraguayan press as describing it as a memorandum of understanding that will facilitate the transfer of asylum seekers from the US to Paraguay, but only those that Paraguayan authorities choose to accept. Senator Rafael Filizzola, of the centre-left opposition Partido Democrático Progresista (PDP), has accused the government of turning Paraguay into a “vassal state” of the US by agreeing to accept deportees from the US.
On 18 October daily newspaper ABC Color reported that Paraguay’s national commission for stateless persons and refugees (Conare) was still reviewing the feasibility of an STCA with the US, meaning the agreement has not entered into force. Congress has requested more information from the foreign ministry about the terms of the agreement with the US, such as estimates of how many asylum seekers could be sent to Paraguay and what impact receiving asylum seekers would have on Paraguay’s public finances. However, ABC Color reported that the foreign ministry did not give clear figures in response to these questions.
In addition to speculating whether the US government’s decision to lift sanctions on Cartes might have been part of some secret deal, Paraguayan opposition figures such as Senator Celeste Amarilla (PLRA) have also raised concerns that Cartes might feel emboldened and seek to expand his power. On 8 October Amarilla said she was afraid that Cartismo, in its “drunkenness for power, which it already had and which has now grown”, might seek to pass the failed constitutional amendment from 2017 to pave the way for a possible return to the presidency for Cartes.
US response
Senior officials in the US government have not given an explanation as to why the sanctions imposed on Cartes by Ofac in 2023 were dropped. However, reports in the international press have cited a US State Department spokesperson as saying that the “sanctions on Cartes and his related businesses were no longer required to incentivize changes in behavior and were therefore not in the foreign policy and national security interests of the United States”.