Paraguay's President Who Moved Embassy to Jerusalem Ousted and Arrested

Paraguay's President, Santiago Peña, who previously moved his country's embassy to Jerusalem and addressed the Knesset, has been removed from office and arrested amid a severe financial scandal shaking the nation. On Friday, 44 senators unanimously voted to impeach him following the collapse of a bank that left nearly three million customers unable to access their savings, as reported by the Associated Press. Shortly after his impeachment, police arrived at Peña's home in the capital, Asunción, and he was placed under house arrest. The former president is suspected of breach of trust, abuse of influence, and using his public office for personal gain, allegations he denies.

The crisis centers on the digital bank Ueno, where millions of citizens held their accounts. After authorities took control of the bank due to a financial crisis, access to customer accounts and payment cards was frozen. Reports indicate that almost half of Paraguay's population has been affected by the collapse. Peña's alleged connections to the bank, in which a company he held shares in until March 2025 was involved, are at the heart of the accusations. Lawmakers accuse him of leveraging his position to funnel hundreds of millions of dollars in public funds into the bank and interfering with its oversight.

The crisis has triggered widespread protests across Paraguay, with thousands of citizens demanding accountability for the collapse. Demonstrators outside the Congress building cheered the impeachment vote, waving flags and chanting against the ousted president. Peña had attempted to preempt the impeachment by submitting his resignation on Thursday, but Congress rejected it and proceeded with the impeachment process. This decision also revokes his eligibility for lifetime Senate status, which includes special legal protections for former presidents.

Peña has maintained close ties with Israel. In December 2024, he visited Jerusalem, inaugurated Paraguay's embassy there, and delivered a speech to the Knesset, making Paraguay one of the few nations with its embassy in Israel's capital. Following Peña's impeachment, Vice President Pedro Alliana was sworn in as president and is expected to serve until August 2028. Alliana, whose own ties to the bank are reportedly under review, has pledged that citizens affected by the collapse will recover their funds. Authorities have begun returning funds to some small depositors, and central bank data suggests deposit insurance covers approximately 97% of the bank's customers. Meanwhile, an investigation into other senior financial officials, including Carlos Carvallo, the former head of the Central Bank, is ongoing.