Credit, REUTERS/Cesar Olmedo
The news coming from the south of America has not been encouraging for American President Donald Trump in recent weeks. After the re-election of Luiz Inácio Lula da Silva (PT) in Brazil, the American will now have to deal with the fall of a first-rate ally: Santiago Peña, in Paraguay.
Elected president in April 2023, it was Peña who initiated the new wave of right-wing leaders aligned with US policies for the region, paving the way for victories in Argentina (Javier Milei), Ecuador (Daniel Noboa), Bolivia (Rodrigo Paz), Chile (José Antonio Kast), Peru (Keiko Fujimori) and Colombia (Abelardo de la Espriella) — a wave only interrupted by Lula's re-election.
Peña was removed from the presidency by an impeachment process in Congress and, soon after, arrested at home. He was detained at the request of the Public Prosecutor's Office amid investigations into his involvement with Ueno Bank, a digital bank that was liquidated due to lack of solvency, leading to the freezing of the accounts of millions of people.
In his place, Pedro Alliana, until then vice-president of Peña, also from the Colorado Party, took over.
Despite Peña's fall, the US and right-wing governments in South America should not lose Paraguayan support for their agenda, despite some warning signs, according to international relations analysts interviewed by the BBC.
The conservative Colorado Party, Peña's party that has dominated Paraguayan politics for decades, maintains a historical external orientation aligned with the US regardless of who sits in the chair at the Lopez Palace, in Asunción, explains Regiane Bressan, specialist in Latin America and professor at Unifesp (Federal University of São Paulo).
"It is an orientation based on three pillars: strict alignment with the United States in hemispheric security, cooperation and alignment with Israel and the maintenance of diplomatic ties with Taiwan, with Paraguay being the only South American country to recognize Taipei", he says.
Only 12 countries recognize Taiwan as a sovereign country. This is because it is a decision that goes against China's position, which sees Taiwan as a breakaway province that will one day return to Beijing's control.
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Although it has no formal diplomatic ties with Taipei, the US maintains strong commercial, cultural and security relations with the island.
Under Peña, ties between Americans and Paraguayans have strengthened, reaching unprecedented levels, Gregory Ross, of Washington-based consultancy McLarty Associates, told BBC News Mundo.
In 2026, he sanctioned the Status of Forces Agreement (SOFA), an agreement that authorizes and regulates the temporary presence of civilian and military personnel from the Pentagon and American companies in Paraguay, to carry out activities related to the entry of vehicles, training and military exercises.
The agreement establishes that employees of the Department of Defense and members of the United States Armed Forces will have "privileges, exemptions and immunities" while carrying out activities linked to the agreement.
The proposal was criticized by the opposition during its discussion, but, even without Peña, the group should have little strength to propose it again, explains Alexandre Coelho, professor and coordinator of the International Relations course at FESPSP (São Paulo School of Sociology and Politics).
"The agreement provoked criticism of the immunities and criminal jurisdiction granted to the US, although it received broad parliamentary support. The crisis may give strength to the debate on sovereignty, but I don't see an automatic review: contesting the agreement is one thing, gathering political strength to change it is another", says Coelho.
In addition, Paraguay also participates in the Shield of the Americas initiative, a regional security alliance launched by Trump to combat drug trafficking and transnational crime in the region.
Credit, Getty Images
For right-wing leaders in neighboring countries, Peña's fall should also have little immediate impact, assesses Coelho, from FESPSP.
"It raises an alarm, but it would be hasty to see a domino effect against the South American right. Peña's crisis has very Paraguayan roots: his old links with the group linked to Ueno, suspicions about bank supervision and, mainly, the abandonment by the Colorado Party, which supported his government", he says.
For Bressan, the regional right, such as Milei, in Argentina, or conservative forces in Brazil, should not suffer a "programmatic contagion".
"It does not yet represent a sign of ideological exhaustion of the pro-US right in South America. The collapse of its government was not triggered by a debate on privatizations, customs or foreign policy, but by the bankruptcy of Ueno Bank", continues the professor.
For Coelho, however, there is a message for other leaders: being an ally of Trump is not an insurance policy for political survival.
"In my opinion, international affinity can yield prestige, but it does not compensate for the loss of trust among the population and the base itself."
'Peña Falls goes beyond Ueno'
It is necessary to keep in mind, according to analysts, that Peña's fall goes beyond Ueno Bank and has to do with a central figure in the country's politics: former president Horácio Cartes (2013-2018), Peña's political godfather.
Cartes is even the target of sanctions from the US State Department and has been betting on aligning himself with Trump to try to reverse them, according to Bressan.
In 2022, under Joe Biden's administration, the United States Department of the Treasury's Office of Foreign Assets Control defined Cartes as "significantly corrupt" and sanctioned him under the Magnitsky Act.
The measure, the same one used against Minister Alexandre de Moraes, of the Federal Supreme Court (STF), is considered one of the most severe measures available for the US to punish foreigners it considers perpetrators of serious human rights violations and corrupt practices.
Cartes continues to lead the Colorado Party and announced support for the process to remove Peña from office. Soon after, the then president read his letter of resignation, which would require the acceptance of Congress — which, however, preferred to proceed with an impeachment process.
"His downfall is, in my opinion, the party's survival mechanics. Peña was never an organic leader of Colorado", says the professor, explaining that the dynamics in Paraguay differ from the classic polarization between left and right in other Latin countries.
Trained as an economist abroad, Peña is a graduate of the Central Bank and International Monetary Fund (IMF), with a more technical profile. He joined the party late, "to function as a modern showcase for Chartism", explains the researcher.
But, when Ueno collapses and the money of millions of Paraguayans is trapped, the former president became "toxic" for his own Chartist allies, he assesses.
"He would not survive without the Colorado party because he did not have parliamentary troops loyal to himself. When popular pressure took to the streets, the risk of an uncontrolled political backlash threatened to spill over into the entire party. And Cartes then applied the classic fuse tactic."
In other words, using a "sacrifice" component or weakest link to protect the rest of the system.
The new president of Paraguay, Pedro Alliana, is considered a trusted politician within the party leadership, having commanded the Colorado Party between 2016 and 2023.
With this, says Bressan, "the party machine guaranteed that the Palace would remain at least until 2028", the year of the country's new election.
For Professor Coelho, however, the opposition may try to take advantage of the moment of crisis to strengthen itself.
Miguel Prieto, from Yo Creo, and Ricardo Estigarribia, from the Liberal Party, are relevant names in the dispute for the 2028 presidential candidacy, he explains.
"The opportunity exists, but indignation alone does not convert into votes: the opposition will need to show that it can govern, and not just denounce. Otherwise, it runs the risk of watching the Colorado Party change the president and preserve power."
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