Paraguay Impeaches President Amidst Banking Crisis and Arrest

Paraguayan President was impeached by the Senate on Saturday, November 7th, with all 44 attending senators voting unanimously to remove him from office. The impeachment followed a severe financial crisis triggered by the collapse of Ueno Bank, which left approximately half the population, or three million people, without access to their savings. Shortly after his removal, the President was detained by police on suspicion of abuse of power, breach of public trust, and other offenses. Thousands of demonstrators outside Congress celebrated the Senate's decision, with some waving national flags and chanting anti-dictatorship slogans. The President, known for his pro-Israel stance and having visited Israel in 2024 to relocate Paraguay's embassy to Jerusalem, had announced his resignation on November 5th due to the Ueno Bank collapse, which was linked to his private business interests. However, Congress rejected his resignation and proceeded with the impeachment, effectively stripping him of his presidential immunity.

Lawmakers accuse the President of using his political influence to direct hundreds of millions of dollars in state funds to Ueno Bank, despite a clear conflict of interest. The prosecution alleges that the president interfered with regulatory bodies and participated in institutional cover-ups involving the Central Bank of Paraguay. Prior to his impeachment, the President stated his intention to resign to avoid further division and instability, expressing gratitude and acknowledging the suffering of those awaiting answers. Concurrently, prosecutors ordered the arrest of Carlos Carvallo, the former head of the financial company that later became Ueno Bank, whom the President had appointed as head of the Central Bank in 2023. The President himself denies any wrongdoing, with his defense claiming he acted without illegality.

Vice President Pedro Alliana was sworn in as the new president, set to serve until August 2028. Alliana, who is also under investigation related to Ueno Bank, pledged to compensate depositors and address the nation's urgent needs. The government faces immense public pressure to recover frozen funds and punish those responsible for the crisis. Alliana promised full compensation for citizens experiencing hardship due to the economic collapse. Demonstrations in the capital, Asunción, saw protestors demanding the President's imprisonment. The collapse has also led to job losses, with a ride-hailing app ceasing operations and leaving 3,000 drivers unemployed. Some depositors have begun receiving partial reimbursements, with deposit insurance covering up to $35,000, which the Central Bank states covers 97% of Ueno's clients. The Central Bank described the bank's failure as an isolated incident, asserting the overall financial system's stability. However, opposition figures, like Senator Rafael Filizzola, have labeled the event as the largest corruption scandal in Paraguay's democratic history, severely damaging the nation's trust and international image.