Paraguay and the Friends We Keep
Last week, Paraguayan Vice President Hugo Velazquez Moreno visited Washington for three days. Velazquez has been accused of being one of Paraguay’s more corrupt politicians. So why did the United States give him the red carpet treatment at the Departments of Treasury, State, and Justice, and on the Hill?
The answer may be that Velazquez is also Paraguay’s shrewdest political operator. The Trump administration needs Paraguay to do its bidding in Latin America. The administration’s efforts to disrupt Hezbollah assets in Latin America likely top the agenda. Hezbollah has entrenched its illicit finance networks along Paraguay’s porous borders, and the group has bought influence among Paraguay’s politicians. It uses their cover to continue laundering drug-trafficking proceeds through the U.S. financial system. Organized crime is also overtaking the country. For years, corrupt politicianshave been reluctant to rein in contraband and an illicit economy reportedly worth $18 billion a year along Paraguay’s unruly frontier. Only a ruthless insider might be able to take the proverbial bull by the horns.
Accusations have dogged Velazquez for much of his public career, suggesting that he has been part of the problem rather than the solution. Putting him in charge may backfire spectacularly. Inviting him to Washington will confer him a legitimacy at home he does not deserve. Yet given the right incentives, Velazquez might deliver what Washington needs.
In recent years, Velazquez has emerged as a Paraguay’s most effective powerbroker. Prior to entering politics, he worked as a public prosecutor. He began work in 2003 as district attorney in Ciudad Del Este, his country’s side of the Tri-Border Area of Argentina, Brazil, and Paraguay. The area is widely reputed to be a “consumer mecca” of counterfeited global brands and contraband goods that handles hundreds of millions of dollars in retail transactions every week. From humble beginnings then, he quickly rose through the ranks of the ruling party, first entering parliament in 2013 and becoming vice president only five years later.
His rise is even more remarkable given his near-downfall in 2017.
Velazquez reportedly came very close to seeing his U.S. visa revoked -- the ultimate mark of Cain for a Latin American politician -- after a December 2016 Foreign Policy article I co-authored with my colleague John Hannah revealed embarrassing details of a trip he had taken to Lebanon the year before. Velazquez, who was then the Speaker of Paraguay’s National Assembly, traveled to Beirut at the behest of Lebanon’s Parliamentary Speaker, Amal movement leader Nabih Berri. He came surrounded by old friends from Ciudad Del Este, including some Lebanese businessmenwhom his former colleagues at the office of Paraguay’s Attorney General were investigating for a giant money-laundering scheme that allegedly benefited Hezbollah. (Velazquez denies any association with the suspects. Despite multiple accusations over the years, he has never been convicted of any wrongdoing.) While in Lebanon, Velazquez did not just spend time in Beirut. He also made a stop in Kabrikha, a village in the Hezbollah-dominated south, where he met local Shiite clergymen and broke bread with members of parliament from Hezbollah and Amal.
Even for the U.S. embassy in Asuncion, that might have been a bridge too far. According to a former Paraguayan cabinet member who spoke to me on condition of anonymity, a senior official inside the U.S. embassy alerted the palace that Velazquez would lose his visa. It took significant interceding from the entourage of then-president Horacio Cartes -- who had already precipitously fired Paraguay’s ambassador to Lebanon -- to dissuade the embassy. (No U.S. embassy official at the time was able to confirm the story).
With such bad press and, allegedly, a hostile U.S. embassy, any other Paraguayan politician might be doomed. Not Velazquez. Three months later, Cartes tried to force a constitutional amendment through Congress to enable him to run for a second term. (Mindful of their authoritarian past, Paraguayans are adamant that their constitutional requirement for a single, non-renewable presidential mandate is sacred). The effort quickly degenerated into street violence. Velazquez, until then a staunch ally of Cartes, led a parliamentary revolt that derailed the effort. A month later, he was welcomed to Washington as Paraguayan democracy’s savior. Soon after, he went to Israel on an official visit. His bid to become vice president was already in the works. His Lebanon escapade was forgiven.
Since then, Velazquez has become arguably even more powerful than his president, thanks in no small part to the fact that last August he successfully brokered a ceasefire between rival factions of his ruling party to fend off a likely presidential impeachment. The impeachment bid came on the heels of a recent scandal involving a deal to sell surplus energy from a joint hydroelectric dam to Brazil. Velazquez saved the president’s skin, notwithstanding well-publicized allegations of his own involvement.
His chameleon nature and political survival skills serve him well in Paraguay’s muddy political waters but are hardly the stuff Washington needs in Asuncion. Yet Velazquez may have the mettle others lack. Velazquez has presidential ambitions. Crowning him as Washington’s man in Asuncion may entail some unpleasantness for the faint-of-heart. It has the undeniable advantage that, if asked to serve his friends’ heads on a silver platter in exchange for the throne, Velazquez and the sycophants he has surrounded himself with will choose the throne.
It may be risky. It might also be worth pondering.
Emanuele Ottolenghi is a Senior Fellow at the Foundation for Defense of Democracies. The views expressed are the author's own.