Paraguay's Senate Unanimously Impeaches President Santiago Peña

On Friday, Paraguay's Senate took decisive action by unanimously declaring President Santiago Peña guilty of misconduct in office, resulting in his removal from the presidency during a session he did not attend. The vote, which saw 44 senators in favor and one absent, marks a significant moment in Paraguayan politics, as Peña becomes only the second president in modern history to be impeached, following Fernando Lugo's ousting in 2012. This unprecedented political upheaval stems not from a personal scandal or war, but from the catastrophic collapse of Ueno Bank, which had been a cornerstone of the country's financial system.

Ueno Bank, previously the fifth-largest bank in Paraguay, served nearly three million customers in a nation of just over six million people, representing about 60% of the adult population. The bank was seized by regulators after its solvency ratio plummeted below the required minimum, revealing a troubling pattern of uncollateralized insider lending to companies linked to the bank's owners. The fallout was immediate and severe, with millions of Paraguayans losing access to their savings, including 32,000 retirees whose pension funds were deposited at Ueno.

The political crisis unfolded rapidly, with lawmakers accusing Peña of misusing his influence to direct hundreds of millions of dollars in public funds into Ueno Bank while allowing regulatory oversights that contributed to its downfall. Peña, who had previously held a financial stake in Grupo Vázquez, the bank's parent company, until March 2025, appointed a former Ueno executive, Carlos Carvallo, to lead the Central Bank. Despite his claims of having divested his shares before the scandal erupted, the damage was done. On Thursday, Peña attempted to stabilize the situation by submitting a video resignation, but Congress rejected it, opting instead to proceed with impeachment.

The political landscape surrounding Peña's removal was complex, involving not only opposition forces but also a significant shift in allegiance from his mentor, Horacio Cartes, the influential leader of the Colorado Party. Analysts noted a growing rift between Peña and Cartes as Peña sought to assert his independence. The collapse of Ueno Bank effectively stripped Peña of his political leverage, leading to a rare moment of consensus in the Senate, which had previously been divided in its loyalty to him. By Friday evening, Vice President Pedro Alliana was sworn in to complete Peña's term, which runs until August 2028.

Public reaction to Peña's impeachment was intense, with thousands of protesters taking to the streets, demanding the return of their frozen savings. Clashes erupted between demonstrators and police, who responded with rubber bullets and pepper spray. Opposition Senator Yolanda Paredes voiced the public's frustration, stating, "He must go, but not home. He must go to a maximum-security prison. The public is fed up with impunity." In response to the crisis, Paraguay's largest teachers' union announced an indefinite national strike, emphasizing the urgent need to protect public pension funds.

In a farewell message released prior to the Senate's verdict, Peña expressed his desire not to contribute to further division or instability, stating, "My responsibility is to put the country above my personal fate." This statement, while reflective of his resignation, did not shield him from the consequences of his actions. Prosecutors have initiated criminal investigations into Peña, as well as current and former officials of the central bank and pension funds, including Alliana. With the removal of his presidential immunity, Peña now faces the prospect of prosecution as a private citizen.

The political and financial ramifications of this crisis are profound, affecting not only the leadership of Paraguay but also the lives of countless citizens who are now grappling with the loss of their savings and the uncertainty of their financial futures. As the nation navigates this turbulent period, the implications of Peña's impeachment will resonate throughout the political landscape for years to come.

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