The United States has long expressed concern over corruption in Paraguay, and the situation has worsened in recent years with allegations involving former President Horacio Cartes, one of the most powerful figures in the country.
Cartes, who served as president from 2013 to 2018, has faced accusations of money laundering, ties to drug trafficking, and using his influence to shield corrupt activities.

US Concerns Over Corruption and Its Impact on Businesses:
The U.S. government is particularly concerned with how corruption in Paraguay affects both economic stability and the ability of U.S. companies to operate freely and fairly in the country. The main issues include:

Business Environment:
Corruption often leads to an uneven playing field for businesses, both local and foreign. U.S. companies have complained about:

Unfair competition, as some companies gain an unfair advantage due to political connections.
Corruption-related costs, such as bribes and kickbacks that drive up operational costs for American firms.
Contracting irregularities, with public tenders often skewed toward certain companies that are connected to corrupt politicians or businesses.

Weak enforcement of intellectual property and labor laws, which undermines the interests of companies investing in the country.
Impact on Security and Rule of Law: Corruption also undermines the rule of law, allowing criminal organizations (including drug cartels) to operate with impunity, which increases instability. This is a concern for U.S. interests in the region, as it affects not only business but also security and international relations.

Human Rights and Governance:
Corruption has contributed to weak governance in Paraguay, preventing the country from addressing issues like poverty, inequality, and human rights abuses, all of which are part of the U.S. government's broader foreign policy interests in promoting democratic governance.

U.S. Response to Paraguay's Corruption and Cartes’ Influence:
The U.S. has taken several measures to push Paraguay to tackle corruption and the influence of figures like Horacio Cartes:

Sanctions and Travel Bans:
In 2019, the U.S. imposed sanctions on Horacio Cartes under the Global Magnitsky Human Rights Accountability Act. This law allows the U.S. to target foreign officials involved in significant corruption or human rights abuses by freezing their assets and banning them from entering the U.S.

Cartes was accused of being involved in a range of corrupt activities, including links to money laundering operations and ties to drug trafficking organizations. U.S. officials have repeatedly linked Cartes to a network of corruption and illicit activities that undermine governance and the rule of law in Paraguay.


Diplomatic Pressure and Engagement:
U.S. diplomats have continuously raised concerns with Paraguayan officials about the importance of combating corruption, strengthening democratic institutions, and promoting rule-of-law reforms.
The U.S. Embassy in Asunción has often spoken out about issues of corruption, specifically calling for accountability in the political and business sectors.

The U.S. works through various international organizations, including the Organization of American States (OAS), to encourage Paraguay to adopt anti-corruption reforms.
Support for Civil Society and Anti-Corruption Efforts: The U.S. has provided funding and technical assistance to help Paraguayan civil society organizations, independent media, and watchdog groups that monitor corruption. This includes support for local organizations that work to expose corrupt practices and promote transparency in government.

Aid Conditionality:
Some U.S. foreign aid and trade agreements are conditioned on improving transparency and governance standards. The U.S. often uses its economic leverage to influence reforms, particularly through mechanisms like the Millennium Challenge Corporation (MCC), which has provided aid to Paraguay under the condition that it adopt reforms to reduce corruption and improve governance.

Multilateral Efforts:
The U.S. works with regional partners in South America, including Brazil and Argentina, to address corruption and organized crime in the region. These countries share concerns over transnational criminal networks that are often linked to corrupt political elites in Paraguay.


Challenges and Limitations:
Despite these efforts, the U.S. has found it difficult to force meaningful changes due to Paraguay's entrenched corruption networks. Cartes and his allies still hold significant influence in the country, and many parts of the political system are resistant to reform. Additionally, Paraguay's domestic politics are often shaped by patronage and the interests of powerful oligarchs, which can limit the effectiveness of external pressure.


Moreover, the Paraguayan government, while publicly pledging reforms, sometimes drags its feet on significant anti-corruption initiatives, especially when key figures are implicated.

Conclusion:

The U.S. remains very unhappy with Paraguay's corruption, particularly the role of Horacio Cartes in undermining governance and business integrity. While the U.S. has used a combination of sanctions, diplomatic pressure, and support for anti-corruption initiatives to address these issues, the situation is complicated by entrenched corruption networks and political resistance within Paraguay itself. The challenge moving forward will be to continue pressuring the Paraguayan government to enact meaningful reforms while also supporting local actors fighting for transparency and justice.