Paraguay

Political turmoil comes after a digital bank’s failure has left half the population without access to their accounts.

Lawmakers in Paraguay have resumed impeachment proceedings against President Santiago Pena, a day after he resigned amid links to the country’s worst financial crisis in decades.

The Senate convened a rare session on Friday to consider Pena’s political future, opting to move forward with efforts to remove the conservative economist from office.

Politicians formally filed impeachment charges against the president on Thursday, despite his resignation. Pena, who was elected in 2023, has requested a 72-hour extension to prepare his defence before the Senate.

The proceedings follow a vote in Paraguay’s lower house of Congress, where lawmakers overwhelmingly approved impeachment charges against Pena in a 78-0 vote.

The political turmoil surrounding the country’s president follows Paraguay’s central bank’s intervention earlier this week at Ueno Bank, one of the country’s fastest-growing digital lenders, citing breaches of minimum solvency requirements.

Pena previously held a stake in Ueno’s parent company, Grupo Vazquez, until last year, when he claims he sold his shares. Paraguayan lawmakers have accused the president of a conflict of interest and questioned whether authorities failed to act on warnings about the lender’s financial position.

The collapse of Ueno, which held $850m in public funds, has left more than half of Paraguay’s population without access to their accounts, drawing intense scrutiny over the government’s relationship with the bank and financial regulators’ effectiveness.

“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfil its purpose, and that public funds — as well as the resources that belong to all Paraguayans — be protected,” Pena said in a Thursday video address where he apologised for failing to prevent the crisis.

The crisis has also prompted the resignation of Paraguay’s central bank chief, Carlos Carvallo, and arrest warrants for eight Ueno executives, who later turned themselves in.

Paraguay’s attorney general has ordered three criminal investigations into the bank’s collapse, including its regulatory oversight and the placement of public funds in the institution.

If Pena is convicted in an impeachment trial, he would lose the lifetime Senate seat and associated legal protections ordinarily granted to former Paraguayan presidents.

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Paraguayan President Santiago Pena resigned on Thursday after calls for his removal swelled following the collapse of digital lender ueno that left millions of customers unable ‌to access their accounts.

“I do so with the stability of our country, social peace and the need to preserve our democratic institutions in mind,” he said in a video recorded address on Thursday.

Pena, an ally of US President Donald Trump, is stepping down after the ⁠opposition called an extraordinary session to begin the process of filing an impeachment motion in Congress, and as protesters demanded his resignation.

Earlier on Thursday Pena lost backing from members of his own conservative party. Vice President Pedro Alliana is set to take office as his replacement.

Lawmakers had accused Pena of conflicts of interest, misuse of pension funds and institutional cover-ups linked to the collapse of ueno, which had grown ‌quickly ⁠from a niche fintech player into a mid-tier bank administering close to $850 million in public funds.

“He is accused of negligence at the very least and complicity in covering up the fact that the bank was insolvent,” said Al Jazeera’s Latin America editor Lucia Newman.

“The congress right now is tying to impeach the president and the vice president, this session is underway,” she added. “As a I speak, there are people outside urging congress not to accept the resignation of the president because they say that they want him tried and impeached.”

Paraguay’s central bank intervened in ueno after determining ⁠that it had breached minimum solvency requirements, setting off a crisis that has left the company’s roughly 3 million customers, in a ⁠country of 6.5 million people, unable to access accounts.

“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfill its purpose, and that ⁠public funds – as well as the resources that belong to all Paraguayans – be protected,” Pena added in his address.

Ueno has made no public statement on the issue.

Chinese foreign ministry cites national sovereignty and Taiwan separatist activities as reasons behind the measures.

China has sanctioned Paraguay’s communications minister and Belize’s foreign minister over ties to Taiwan.

The Chinese Ministry of Foreign Affairs made the announcement on Monday, citing the safeguarding of China’s national sovereignty and opposition to Taiwan separatist activities as the reasons behind the measures, which went into effect the same day.

The measures against Paraguay’s Communications Minister Gustavo Villate and Belize’s Foreign Minister Francis Fonseca include the freezing of their assets in China and the denial of entry visas to Hong Kong and Macau.

The sanctions also prohibit Chinese organisations and individuals from engaging in transactions, cooperation or other activities with the ministers.

The Foreign Ministry said that “certain anti-China politicians” who are “driven by self-interest” have pushed their nations to maintain diplomatic relations with Taiwan.

Beijing said the ministers had “taken a series of egregious actions and statements”, which are “damaging China’s core interests”.

Paraguay and Belize are two of 12 countries that maintain formal diplomatic relations with Taiwan.

China views Taiwan as its territory, a view the island’s government strongly rejects.

The measures come two days after Taiwan’s National Day celebration.

In a National Day speech outside the Presidential Office on Saturday, Taiwan President William Lai Ching-te said the island “cherishes peace” and will “not give up our freedom”.

China’s Taiwan Affairs Office condemned Lai’s speech, saying it “disregards facts, ⁠distorts the truth, misleads the public, and reveals ulterior motives”.

In January, Chinese President Xi Jinping pledged to achieve the “reunification” of China and Taiwan, calling the goal “unstoppable”.

Diplomatic relations

Paraguay’s Communications Minister Villate marked Taiwan’s National Day with a social media post, saying: “Paraguay reaffirms its relationship of friendship and cooperation, based on shared values and principles: the self-determination of peoples, human rights and democracy.”

The Belize embassy in Taiwan also posted a message on its Facebook celebrating the 37th anniversary of their diplomatic relations.

“Together, we look forward to a future of growth, opportunity, and lasting friendship,” the embassy wrote.

Last month, Taiwan’s Foreign Minister Lin Chia-lung visited Belize. His ministry said the two sides had agreed to deepen ties.

Taiwan’s other allies in the Americas include Guatemala and Haiti. It also has formal diplomatic ties with three Caribbean islands.

The United States does not have ⁠formal diplomatic ties with Taiwan, but Washington is bound by law to provide the island with the means to ‌defend itself.

Earlier this month, the US delivered two fighter jets to Taiwan as the island seeks to build its defence capabilities to deter a feared attack from China.