American Thought Leaders - EXCLUSIVE: President Santiago Peña on What Trump’s Return Means for Paraguay and Latin America

Episode Date: January 26, 2025

In this episode, we have a special guest: Paraguay’s President Santiago Peña.Paraguay is a unique country. It is one of only 12 countries in the world that recognize Taiwan instead of communist China.It is also one of only six nations in the world, alongside the United States, that have moved their embassies from Tel Aviv to Jerusalem. Peña said he made the decision despite immense opposition from other world leaders.An economist, Peña served as Paraguay’s minister of finance before he was elected president. He assumed office in August 2023 after a landslide victory. During his tenure, Paraguay has seen robust economic growth, outperforming many other Latin American nations. Last year, Moody’s awarded Paraguay an investment grade rating.In this episode, I ask President Peña about what President Donald Trump’s return to the White House means for Paraguay and Latin America more broadly, his hopes and economic strategy for Paraguay, why he’s concerned about communist China’s influence in the region, and what he thinks about Trump’s recent comments about controlling the Panama Canal and renaming the Gulf of Mexico.Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of The Epoch Times.

Many of the countries in South America who decided to move from having a relation with Taiwan to have a relation with China, many of them thought that making this move, my country will be much more developed. And the reality is not that. It's quite the opposite. They are less developed. In this episode, I have a very special guest, the president of Paraguay, Mr. Santiago Peena. Paraguay is a very unique country. It is one of only 12 countries in the world that recognize Taiwan instead of communist China. We cannot put economic interests ahead of the values and the principles. Paraguay is only one of six nations in the world, alongside the United States, that have moved

their embassies from Tel Aviv to Jerusalem. Peña said that he made the decision despite immense opposition from other world leaders. An economist, before he was elected president, he served as Minister of Finance. He assumed office in August 2023 after a landslide victory. President Trump is a great opportunity not only for the U.S., but for the entire world to improve and give more visibility to a positive agenda. We need to make ourselves stronger, and you make stronger by investing in the people. This is American Thought Leaders, and I'm Jan Jekielek. President Santiago Peña, such a pleasure to have you on American Thought Leaders, and I'm Jan Jekielek. President Santiago Peña, such a pleasure to have you on American Thought Leaders.

I'm very happy to be here. So we're just sitting here one day after the inauguration of President Trump. You must be thinking a lot about what a future cooperation between America and Paraguay might look like. What's on your mind? I think that this could be the greatest moment of, I mean, we have more than 150 years relation between Paraguay and the U.S.

But I think that the next four years will be definitely the highlight of our history. I think that every world leader has been tuning yesterday on the TV. History was in the making. So being here in Washington, the inauguration of President Trump, I could not think of any other place in the world for any world leader. And in my case, for a country that has been a longstanding friend of the U.S.

and for the right causes. We are one of the few countries in the world that we have a trade deficit with the U.S. They sell us more than we sell to them. We have a strong alliance with Israel. We have a strong alliance with Taiwan. We are a good friend on both of these countries. We make us probably the on both of these countries. We make us probably the best ally that the U.S. has in the entire Western Hemisphere and among all the countries in the world. So having the chance to reflect during the last four years on all the things that he went through, I think there are great times ahead of us. Well, you know, President Milley was also here,

and I think he wants to challenge you for the best partner to America, maybe. What do you think about that? Yes, I mean, we are very good friends with President Milley, and he's doing a great job. Of course, Argentina is a major player in many aspects. He's a member of the G20. And of course, we are in a different path. I mean, the situation, the economic situation of Argentina is much tougher than the one that we are doing.

We are in a different stage. The country is growing. The economy is developing. We attained investment grade last year, but our dream or our objective is to become a much more developed nation in the coming years. So, of course, we also are interested in being a regional player in Latin America. We are a couple weeks away on the election of the next Secretary General of the Organization of American States, where Paraguay has put a candidacy for that position. So we want to become a greater and more important player.

We want to leave behind the image that one famous writer put about Paraguay, the island surrounded by land. If you can perceive that, the Paraguayan people isolated from the region and the world. And we are now in a moment that we want to not only participate, but we want to be leaders. It's very interesting you talk about the economy. Of course, you're a former finance minister, you're an economist yourself. Paraguay, in last year, I believe the credit moody has upgraded the credit rating as well. I mean, partially, certainly because of your

work. What is it that is making this whole system stable? I think it's hardship. I think that being in the middle of two large and complicated countries made it stronger. For many decades, Paraguay economy was dancing at the tune of samba or sometimes tango and at some point we decided we need to put our own music and we need to have our own strength so we start to do it a lot of many changes and we're talking about 25 years ago that we start a process of reforms having a more independent central bank a fiscal policy that is more responsible. So for over 25 years we have been on a silent path, but very effective path that now allows

us to obtain these results and to harvest these results. Obtaining investment grade is not a minor detail. For 10 years no country in the world obtained for the first time the investment grade. The last one was the Philippines 10 years ago. So for Paraguay to obtain this and to join a very selective group of countries that are performing above the rest is a tremendous privilege. But this is nothing. This is nothing compared to what we think that we could be in the next couple of years. That's why I went to Paris in December of last year to the OECD, the Organization of Economic Cooperation and Development, and we asked them to initiate the procedures for

Powai to become full members. This is the club of the countries with the highest standards of living and the best practice in the world. So this is the type of development that we are envisioning. And we feel very confident that if we follow this path, if we continue on the trajectory that Paraguay is doing, if we continue to perform above the rest of our peers, Paraguay will become not only the country with the highest

level of development in Latin America, but among the top of the world. Well, and you've managed to reduce the poverty rate dramatically over the last 20, 30 years. Yes, it went from 60% to a little bit below 20%. And we are convinced that there's absolutely no reason for a country that produce food for 100 million people, a country that have land, water, electricity, clean, renewable electricity, that we still have some people who is living below this minimum standard. So we are targeting better. We are improving the efficiency I put in place last year, major programs on school feeding program,

helping alleviate poverty on the most vulnerable, and more importantly, creating jobs. Paraguay society is convinced that job creation is the best social program for people to stand on their own feet and at the end to be free. I think this is the concept, the idea behind having a market economy and a government that focuses on a very limited set of things, allowing the private sector to focus on most of the creation of wealth in the society. You were telling me, I made a joke a little bit earlier about, the first question I was going to give you was,

tell me about the Paraguayan Navy. And you said, well, Jan, actually, let me tell you about the amazing barge system that we have. So why don't you tell me about that? Sure, absolutely. Paraguay, on the outset, it seems as an isolated country, a landlocked country, but in fact, it's surrounded by a system of rivers. And these are the two largest systems of rivers that bring the sweet water of the Amazon. The Amazon works as a sponge. It collects a lot of water from rain. And then all that sweet water goes from the rivers to the sea. And it goes right through the middle of Paraguay.

So we have this system of rivers that allow us to mobilize 90% of all the goods that we produce. I mean we're talking about the second most open economy in Latin America after Mexico. We are a very open economy. We trade with the rest of the world and the only way to do that is to connect logistically. We are a little bit far away from the ocean but we have this system of rivers that allow us to mobilize goods. So Paraguay today holds the third largest fleet of barges in the world. China is the number one. The U.S. with the system in the Mississippi is the number two.

And Paraguay becomes now the number three. And this is growing as we see also some parts of Brazil which are more landlocked than Paraguay. The Mato Grosso do Sul, which produce most of the agricultural output and mineral output of Brazil, they need the waterways. So we are doing a lot of investment in improving the navigability of the waterways so they will continue to expand. But the waterway also allows us to become the small Qatar of sustainability.

Paraguay is probably the largest producer per capita of clean renewable energy in the world. We export 80% of all the electricity that we produce. We consume only 20%. This is expanding. Every year last year grew by 20% energy consumption. This is coming by mostly two hydroelectric dams that are huge. We're talking about the largest hydro plant in the world,

largest in the Three Georges in terms of energy production. This is called Itaipu. It was designed 50 years ago. It was built 40 years ago and still today is the largest in the world, thanks to that huge system of rivers. I mean, that's incredible. But speaking of water, President Trump yesterday promised to rename the Gulf of Mexico to the Gulf of America. Your thoughts? Well, it's very interesting. I have to acknowledge that during the first Trump administration, I did not get many of his strategy. Now I understand it much better.

And I think that sometimes people get misguided about the action. It doesn't look what is the strategy behind that action? Okay. So I think that President Trump is becoming with a very strong stance with Mexico, with Canada, on Greenland, also a very strong position. But I think beyond the action, there's the idea of national security and national identity and putting America first. So he's not against Mexico. He's not against Canada. He's in favor of Americans, of U.S. citizens. Put them first. And I think this is a great way of thinking. I think that the U.S. has given a lot of attention to many parts of the world. And I'm talking about not the previous administration, the last 25 years, the notion of having a more globalized world and international trade, having China entering the WTO 25 years ago, it created a lot of benefits, but also created a lot of risk and threats to the world economy and to the U.S. So I think that President Trump in this second administration,

he's going to be much more focused on making sure his vision and his strategy will be implemented very shortly. You sort of hinted at this earlier in the interview, but I'm wondering if you think the way Paraguay will relate to the U.S. will be very different with this administration than the previous one? Sure, absolutely. Paraguay has been a very good friend of the U.S. forever. We always had a great relation.

One of our main problems is that we are not a problem. We are not a troubled country. So we don't get a lot of attention for that, right? But the fact, the truth is that every time that there was a Democrat president at the White House, the relation with Paraguay and Latin America, it was very, very low. So, for example, no Paraguayan president was ever received by a Democrat at the White House. During democracy time, we never. It was always Republican. It was President Bush.

It was President Trump in the past administration. But never a Democrat will receive a parliament president without having any complication, any trouble, right? So I think that this will be a great opportunity to visualize, to improve and give more visibility to a positive agenda. I think that the U.S. has spent a lot of time in trying to solve troubled countries without giving attention to the good countries, to the good allies, to the ones that are holding the same ideas, that are holding the same belief about freedom, liberty, respect of rule of law, and of course, joining forces to make sure that these ideas go beyond our

own borders. So let's talk about the Panama Canal. Now that's a big waterway. Yes. Obviously. Yes. So what are the implications of President Trump wanting to bring that back under American control? Again, I think that many people are focusing on the action and he's not understanding the strategy. I think that thinking that the U.S. will physically regain control of the canal, I

think it's going to be very hard. But we cannot give away the fact that China's influence on the use of the canal, as in many other infrastructure in Latin America, is putting a risk on the international trade and the world trade and the trade with the U.S. So I think what President Trump, this is my interpretation of the action, is that he wants to know that the U.S. is being treated fairly, that that asset that was built almost a century ago with the resources of the U.S. and it was given through a century ago with the resources of the US, and it was given through a great agreement

between President Carter and Trujillo, remains a viable source of prosperity and growth for the Americas and for the region, and not a tool for the expansion of the Chinese trade. And again, I understand this very well because Paraguay is not an ally of China. Paraguay is an ally of Taiwan. So we understand very well the threat and the risk

that the U.S. is seeing of the expansion of the Chinese trade. So, I mean, this is, if I may, just something quite remarkable, right? There's only 12 countries in the world that recognize Taiwan and not the Chinese regime, basically. And Paraguay is the largest one. And Paraguay is the largest one. And I'm sure, you know, recently you actually expelled a Chinese diplomat for agitating in the other direction. This is, I don't know, quite remarkable, I think.

And just so explain to me why and what you think about it. It's remarkable when you don't understand where Paraguay is coming from. And I think this is my greatest desire for people to learn the story about Paraguay. This is a country that five centuries ago, 500 years ago, received the first flow of Spaniards that came to the continent. They first landed to the coast of Argentina, west of Argentina, and they couldn't stay there, so they started, and the reason is because they found a very hostile indigenous community.

So they would start, they began a journey through the river. Again, the river was the source to connection to the rest of the world. They called the Silver River. They were looking for silver and gold. And in the year 1537, they landed to a bay and they found the daya and they said, we're gonna remain here and this will be the base of the operation.

The reason of that, I remember, it was far away from the ocean. The reason why they decided to settle there is because they found a very friendly indigenous community, the Guaranis. So for 300 years, Asunción, our own capital, became the center of the colony. We were the first country to gain independence from Spain.

The first one in 1811, ahead of Brazil, Argentina, Uruguay, Chile, Colombia, almost everywhere, Mexico. So we were an independent nation when many other countries were still responding to the influence of Spain. So from that moment on, the neighborhood became very, very hostile to the point that three countries in the year 1864 declared the war against Paraguay, Brazil, Argentina, and Uruguay. And it was a war of extermination. We fought back for six years and at the end of the war,

we lost 60% of the territory and 90% of the male population. More than half of the entire nation was killed. So that was the history behind the rebuilding of Paraguay and why we lagged behind after being the most developed nation in Latin America in the 1800s. So when you look at the threat that Taiwan has to face because of the influence of China or the threat that Israel has to face in a very tough neighborhood, we feel very identified. These are our own same fights that we have been fighting for many, many years. So this created this sense of resilience.

Nobody's going to solve our problem. We need to make ourselves stronger. And you make stronger by investing in the people. The people is the one who's going to, at the end, preserve. I mean, remember, when no people was alive in Paraguay, it was a few Paraguayans who maintained the idea of being a nation. And the woman played a fundamental role in the rebuilding of the nation. I mean, that's an incredible, absolutely incredible story. But you know that, of course, China has a huge influence all around you, right? And so, and, you know, obviously, always trying to influence your country as well.

Influence our country and influence our surrounding countries also to exercise pressure on us. We are, of course, a country of only 6 million people, so we depend a lot on the international trade and the good relations that we have with many of the countries. And we are ready always to pay the high price for standing for the right causes. I mean, when the Russia-Ukraine conflict emerged in 2021, Russia was the second largest market for the beef export of Paraguay. So we took a very strong stance on defending Ukraine and the beef market of Russia immediately close to Paraguay.

And we have to redirect and we open other markets and we work it, but we cannot put economic interests ahead of the values and the principles. Otherwise, the path is very, very complicated. Mr. President, this is a rare phenomenon in this world. I know. I know. And we are more than willing to be more loud about these ideas. We think that and I think that the presidency of President Trump is a great opportunity not only for the U.S., the Western Hemisphere, but for the entire world. I think that we need to try to bring a little bit of common sense because this is nothing to do with ideology, right or left. This is common sense, basic common sense about the well-being of the people and how we respect the people and how we maintain our own principles and values. I mean, Paraguay society believes that life should be respected and protected from the inception.

Abortion is forbidden in the Constitution. And we don't discriminate, but we understand that marriage is a union between a man and a woman. This is our understanding. We don't discriminate nobody for a different option, but the Constitution holds this as a fundamental value. And we have to pay a very high price in many periods of time, more recently. And we hope that this is now going to be one of the greatest strengths of Paraguay. The United States, under President Trump, is very skeptical of many multilateral organizations. For example, he recently announced leaving the WHO, right? I know that Paraguay actually is quite involved in many multilateral organizations. And I also

know that, let's say, China has significant influence in some of them. Some people even argue some of them are controlled. Yes. So how do you manage that difficulty? I would strongly encourage the Trump administration not to give their back to the multilateral system, but to built on the image and idea shaped by the US, UK, the Western ideas. But over the last seven centuries, those ideas have been fading away. And with the intention of bringing more views, and we have given more space to countries that don't share the same principle and values, I think that these institutions have really diminished in their capacity to solve problems because these institutions were built on the idea that we should not have a war anymore. There are more than 50 conflicts now. In this moment, there are more than 50. It's not only Ukraine and Russia, it's not only Ukraine and Russia,

it's not only the Middle East, it's not only the conflicts that we are seeing in the case of Haiti that nobody's talking about, but they're still living in a very fragile situation. So I would strongly encourage that the U.S. help to reshape this institution. Paraguay is proposing a candidacy for the Organization of American States. Next year, the Western Hemisphere will have the opportunity to appoint a national of the Western Hemisphere to be the head of the United Nations. This doesn't happen every year. We are choosing after 10 years,

and I think it's going to be the chance for the Western hemisphere after five decades. So this is a great opportunity that we need to get involved and we need the strong leadership of the U.S. Now we can go back to the efforts that Secretary of State Henry Kissinger did convincing Mao to get closer to the Western world, to the incorporation of China to the WTO. And we can see a lot of the benefits, but I also see a lot of the threats, because they are not abiding to the same rules that we are abiding. And we are seeing now not only the Communist Party who decided not to have free elections in China, but now we are having a leader in China who is going against the idea of making changes without the same system, within the same system.

So I feel very, very concerned about the influence of China in all these institutions. And the only way that China will have more influence in these multilateral institutions is if we give them the space and the room. If the U.S. gives them back to this multilateral system, then we're going to give more space to China. You've already answered some of my next question, which is really about the U.S. through some of President Trump's appointments, he's indicated that China is a major issue.

The National Security Advisor, the Secretary of State, this is a big challenge. How can Paraguay and the U.S. work to contain that threat or stop it? We are the blind spot in South America. We are the only country that is not under the influence of China. We have nothing against China. But we think that Taiwan deserves an opportunity. The same way Paraguay deserves an opportunity. We deserve an opportunity.

So I think the idea behind Paraguay as a strong ally to show to other countries, because many of the countries in South America, many that I have spoken over the last couple of years, who decided to move from having a relation with Taiwan to have a relation with China, many of them failed on promises. A lot of the time, many of the leadership thought that having a relation with China will open the market, the Chinese, the huge Chinese market. And the reality has been quite the opposite. They have opened their market to a manufacturing capacity, an industrial capacity that doesn't comply with the same labor laws that we apply, that don't respond to the same environmental standards that we

abide, that don't comply with the same AML regulation that we comply. So the rules are not even. And many of them said, look, I thought five, 10 years ago that if I was making this move, my country will be much more developed. And the reality is not that. It's quite the opposite. They are less developed. They rely more on manufactured goods from Asia and less on the capacity to create jobs in their own country. So that's why we have decided to follow a different path. A relatively small country that developed an industrial base, high quality products that are able to compete with any country of the world

including with China, including with China because our largest trading partner is Brazil and many of the industries that come to Paraguay came from Brazil, but they don't brought the job from Brazil. Brazilian companies that before that they were buying products from Asia. So they said, I'd rather buy it from next door. Having this idea of near shoring or French shoring, which I think it makes a lot of sense. What do the Taiwanese think about you guys? They think that we are very good friends. I have known them for many, many decades now.

I went there in my early 20s. I was amazed about the history for what Chiang Kai-shek did and, of course, how they have evolved from a dictatorship. It was at the beginning to a democracy and how democracy was able to produce much better outcome. And this is our own history. And remember, we have to endure the longest dictatorship in South America, 35 years under a military regime. And now we have 36 years of democracy and the results are astonishing better. We still have a long way to go, and the results are astonishing better. We still have a long way to go,

but the results are astonishing better. So my parents, Mr. President, escaped communist Poland in the 70s. And it happens that in 1989, that dictatorship became a democracy. And I understand it happens to be the same year for Paraguay. And it seems that you've been able to hold it all the way through. Yes, because the feeling is not coming from the top, but from the bottom. I went to Israel in December, now, a couple of weeks ago. And I opened the Paraguayan embassy in the eternal capital of Jerusalem. A quite controversial move. And I have so many war leaders calling me, asking not to do.

And I said, I will do it because this is the desire of the Paraguayan people. When I was campaigning and I was traveling around the country, it was in universities or in the rural area, people will ask me what I will do to support Israel. And I'm talking before the horrible attacks of October the 7th. So we went there and we did it with a full confidence that is the right thing to do in probably the worst moment of our friends. So I think that as people get to know more about the history of Paraguay, as people get to know more about the people of Paraguay, they will be able to understand.

And with a great sense of humility, I think that Paraguay has so many to give to the region and the world and maybe become a lighthouse on many of the things that we want to preserve. I mean, freedom, democracy, rule of law, and just the idea that nobody should be told what to do and we should all be able to live free in this world. If there's one hope you have for the next, well, let's say four years to start, what would that be? The most important thing.

To convince the American people and major stakeholders, Capitol Hill, Congress, that the relation between the US and Paraguay matters much more to what they realize. So this is on the bilateral relation with the US and the American people, because I will pass as president of Paraguay, but the country will continue to be there. And the country wants to continue to develop and want to defend the same ideals that the American people want to preserve. This is the greatest democracy ever. So for us, this is very, very important.

And for my people, for the people of Paraguay, my greatest desire is that they become so ambitious, so ambitious that they will work very hard to make Paraguay decided to gain independence. Imagine, I mean, we're talking about the colony times and every country in South America was a protectorate of the Spanish crown. And Paraguayans, young Paraguayans, thought the idea of freedom and independence, that we were the first one to gain independence. And that idea and those notions make the country the most developed nation in the 1850s.

So Paraguay had the first steam train in South America. It was a country that was able to eradicate unalphabetism in 1850. It was the most advanced human capital. And that advancement, it was the one who created this sense of lack of tolerance and envy from our neighbors. And they decided that they wanted to erase Paraguay from the face of the earth. It was not geography. We didn't have was not geography. We

didn't have the best geography. It was our belief of having this or becoming a great nation. So we paid a very high toll for those dreams. And those dreams, believe me, they are very present in all of us. You know, I want to touch on that. You mentioned literacy very early on. Basically, you got it through the entire country. I was thinking to myself, how is it that all the Paraguayan people, I was in the economy, some significant part of it is subsistence. You don't necessarily always associate that with a highly literate population that cares about international issues, right? Well, for a country and a nation that was on the verge of extinction

and after the war, first of all, the Allies remained, when the war ended in 1870, the Brazilian troops still remained in Paraguay for another seven years. So the process of rebuilding the nation and to heal many of the wounds, they don't go away from that one day to the other. So this feeling that Paraguay become an island

surrounded by land, a country that was isolated, it was driven because the Paraguayan people were afraid. They were afraid. Our grandparents and great-grandparents grew up in a country that was rebuilt from the ashes. And those ashes were part of the fire that was brought by our neighbors. It was not a foreign nation far away through the ocean.

No, no, it was the guy next door. So many of the problems that Paraguay has to endure has to do with open wounds that are more and more now closing. And we're leaving behind. And we have decided, because you're not going to find in Paraguay nobody that will talk about this with a sense of angry or revenge. No. We have healed already that part of the history, but we want to regain a more relevant place in the world. Mr. President, any final thought

as we finish our interview? I hope to host you in Paraguay. I'm sure that you're gonna find much more that I have told in this interview. Well, I can tell you, I am incredibly inspired to take you up on your offer, having spoken to you now. Mr. President, thank you very much. A pleasure. Thank you all for joining President Santiago Peña and me on this episode of American Thought Leaders. I'm your host, Jan Jekielek.