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AC/DC WAS BLARING IN THE BACKGROUND. Fireworks lit up the sand of El Zonte beach. The audience of thousands of people screamed in euphoria. It was not a rock concert but the Labitconf festival for Bitcoin enthusiasts. Nayib Bukele, the president of El Salvador, announced on November 20, 2021 the launch of the Bitcoin City, his plan for a technological city in which the only tax would be the VAT and where the cryptocurrency would reign.
Several months later, the project that Bukele announced in English to a foreign audience on the beaches of El Salvador has been diluted. The idea of a technological city, hub of the Bitcoin followers, was buried by the reality of a country facing multiple crises, including widespread crime, poverty and inflation.
Yet nothing seems to tarnish the international perception of Bukele. In the circles of Bitcoin enthusiasts, the controversial president of El Salvador is almost a messiah. This is for good reason. Bukele is the only head of state in the world to decree Bitcoin as legal tender, second only to the U.S. dollar. He has sought to force Salvadorans to adopt the cryptocurrency, despite the fact that the real conditions of the Central American country end up being imposed. The government has even brought out its own digital wallet, the Chivo Wallet, which it sold to Salvadorans offering them a $30 bonus with the subscription.
As well as his unique monetary policies, Bukele is recognized beyond his country’s borders for his lack of political correctness, his frankness in denouncing the hypocrisy of the countries that criticize his ways, his impeccable and very astute management of social networks, and his seemingly successful policy of combatting gangs and violent crime.
One of Bukele’s most popular pledges was his crusade against crime. For no obvious reason, he succeeded, and El Salvador, a traditionally violent country with a strong history of gang warfare, began to record days without a single homicide. No one understood what was happening, all while Bukele bragged about it on his Twitter account.
Nayib Bukele’s success catapulted him as an efficient and tough leader against the gangs, mainly the Mara Salvatrucha, which reigns in El Salvador. Yet one day, it suddenly came to an end. Following months of historically low murder rates (at one point the figure was close to zero), El Salvador recorded its most violent weekend in decades: 87 people killed between March 25 and 27 of this year. On March 26 alone, 62 people were killed. The bloodiest day in the recent history of the small Central American country.
The revelations surrounding Bukele’s decisions have exposed the true nature of his leadership. The idea of the myth, the rockstar, is all ultimately fictitious. What Bukele’s government hides is much darker than what the cowered press manages to report. Nothing is what it seems. The fireworks or AC/DC only garnish a complex web of corruption, criminality and incapacity.
Pact with the mafias
While homicides decreased considerably, disappearances increased. In all of 2020, some 200 people disappeared in El Salvador. By the end of 2021, the figure had doubled. The state pretended to be looking for them, but relatives of the disappeared have denounced several times that no one is helping them. In February of this year, several mass graves were found by the police. For Cesar Reyes, deputy for San Salvador for the right-wing ARENA party and director of Electoral Affairs, it is clear what has been happening.
“Although homicides were reduced, the perception of insecurity remained intact,” Reyes told El American. It is important to put this in context: while homicides were dropping, it was not only disappearances that were increasing. In 2021, other crimes, such as extortion, robbery and rape, also increased. According to the National Police, there was an “increase in eight out of ten impact crimes” compared to the previous year. It was therefore natural that the perception of security, although the government tried to market the opposite from Twitter, remained intact.
“And then, the disappearances began,” Reyes continued. “Networks of people looking for their relatives. Mothers looking for their children. There is a clear correlation between the reduction in homicides, missing persons and mass graves. What was happening was that the criminal groups had these clandestine graves so that the government would not count the deaths as homicides.”
“They were being reported as disappeared, not as homicides,” Reyes added. Then, at the end of March this year, the murders began to be counted.
To understand how Bukele managed to practically neutralize homicides in the country and then, from one day to the next, everything got out of control, one must listen to the journalists from El Faro, who have dedicated themselves to the courageous work of exposing what the Bukele government does not want to be made public. One of the things that the government wanted to hide was its pacts with criminal gangs.
Gabriela Caceres, an investigative journalist at El Faro, explains that to understand the agreements between the government and the gangs, one has to go back to 2015, during Bukele’s campaign for mayor of San Salvador, the country’s capital. “Thanks to the information that El Faro was able to gather from sources in its own team and from the gangs, we discovered that he gave money to criminal organizations so that they would not boycott the elections,” she told El American.
While he was mayor, allegations also surfaced, but Bukele consolidated all the agreements with the Mara Salvatrucha and other gangs as president of El Salvador. According to what El Faro has revealed, “Bukele agreed to reduce homicides in exchange for prison benefits,” she added.
According to the media outlet’s revelations, a Bukele official, Carlos Marroquin, director of “Reconstrucción del Tejido Social,” and the vice minister of Public Security and director of penitentiaries, Osiris Luna, met on several occasions with gang leaders to agree on the benefits. El Faro revealed photographs of Luna entering maximum security prisons with hooded individuals, who were allegedly “sent by the government to negotiate.”
The media outlet where Gabriela Cáceres works published recordings and photographs that back up the accusation.
“The government of President Nayib Bukele held negotiations in 2020 with the three main gangs of the country inside maximum security prisons, with the aim of ensuring that the number of murders in El Salvador maintains its historic drop. In exchange, the organizations have put forward a series of demands that include improvements in prison living conditions and benefits for their free members,” reads an article published in El Faro on August 23, 2021.
“The tapes confirm that there was a negotiation. When we first published this, in August last year, Bukele denied everything and mocked the press. He asked for photographs and audios. We published the photographs and the audios. He continued to tease us. But what is really going on here is an under-the-table negotiation,” said Cáceres.
“And the negotiation was exposed when the pact was broken in March,” the El Faro journalist added.
“[The agreement was broken] because [the government] did things they didn’t have to do. That’s why those 80 dead from those dates were found, am I clear? They failed to comply. They captured when they didn’t have to. They said ‘come to such and such a place, we are going to talk,’ and instead of talking, they captured,” a Mara Salvatrucha leader told El Faro.
In that article, the media outlet also exposed audio of Bukele’s official, Carlos Marroquin, confirming that the pact had been broken and that he hoped it could be resumed.
“Bukele allowed the gangs to operate with complete freedom. He improved conditions for them and even avoided the extradition of some criminal leaders,” Congressman Cesar Reyes told El American.
Power through force
One image will remain forever in the memory of Salvadorans: before he had a legislative majority, Nayib Bukele stormed into Congress, escorted by military men armed to the teeth, to demand that deputies approve a $109 million loan to finance his anti-gang policy.
Guarded by dozens of rifle-wielding men, Bukele threatened an “insurrection” if the deputies did not comply. He invoked divine right to justify the outrage: “God, you asked me for patience, but these scoundrels do not want to work for the people.”
Congress then called the episode a “coup d’état” and refused to approve the loan. But the days of that Congress were numbered. Legislative elections were just around the corner and Bukele’s party, Nuevas Ideas, was leading the polls.
On February 28, 2021, the Nuevas Ideas party won 66% of the vote, with a total of 56 seats, out of 84 in total. It was followed by the right-wing ARENA party, with only 12.18% of the votes. About 14 seats. It was a surprising, almost historic triumph, with which Nayib Bukele achieved an absolute majority in Congress. Now, Bukele dominated another of the powers of the State, and with ease. He was unstoppable.
“Nuevas Ideas + GANA [party that supports him] will have more than 60 deputies in the New Assembly. Thanks to the Salvadoran people. Thanks to God,” Bukele tweeted on the night of February 28.
Graciela Rajo, the anchor of Channel 12 in El Salvador, told El American that the president still enjoys huge popularity: “He really is very popular. His policies have a high approval rating according to different pollsters. The acceptance is so high that even the population itself attacks journalists who denounce the president.
“Yes, Bukele is as popular as he seems. In El Salvador, during the legislative campaign for deputies, the slogan for people to support Nuevas Ideas was ‘Vote for the N of Nayib’. And many people all over the country voted for deputies whose names, positions or history in politics they did not know, just because they were Nayib’s candidates. There were deputies whose campaigns featured a large Bukele’s face on the banners; and their face in a corner, small,” Salvadoran journalist Karla Arevalo tells El American.
“It’s not only happening in El Salvador. The Salvadoran community in the United States is also quite supportive,” Arevalo adds.
According to several polls, Nayib Bukele is the most popular leader in the entire continent. The consulting firm Mitofsky gives him an 81% approval rating. An investigation by the newspaper La Prensa Gráfica concluded that 85% of Salvadorans approve of their president’s performance, more than two years into his term.
Rajo tells El American that “many analysts consider that the approval is due to the populist discourse.” Bukele is indeed a populist. But he is more than that. He is astute and has been building a base that adores him. He has deified himself, justifying every decision in God’s will. It is, in the end, his divine right. And divine right was what, according to him, guided Bukele and his deputies in the next step.
“Last year, in August, we revealed that the Attorney General’s Office was investigating that the Bukele government was negotiating, not only with the Mara Salvatrucha, but with Barrio 18 Revolucionarios and Barrio 18 sureños [the other two main gangs in the country],” says Gabriela Caceres of El Faro.
“Until April 2021, the Prosecutor’s Office led by Raul Melara was conducting a criminal investigation against several Bukele government officials […] this series of negotiations were documented by the Prosecutor’s Office through audios, photographs, documents and testimonies,” reads El Faro.
“The prosecutors in charge of the investigation baptized the case as Catedral, and seized official documents from penal centers,” the report continues.
The article published by El Faro is backed up by several photographs, writings and documents.
The Prosecutor’s Office of Raul Melara, then independent, had been investigating Bukele’s officials since the beginning of his government. It was clear that for the president the Attorney General’s Office was a problem. Something had to be done. It was urgent to stop Melara’s efforts.
On May 1, 2021 the new Assembly controlled by Nayib Bukele was sworn in. The deputies took office and what was expected to be simply a protocol ceremony ended up turning into an aggressive political struggle and a swift occupation of the rest of the branches of the State.
Already with an absolute majority, the deputies of Nuevas Ideas and GANA skipped the protocol and, without having been on the agenda or discussed by any commission, met until late at night to dismiss, first, the magistrates of the Constitutional Court and, then, the Attorney General Raúl Melara.
With 64 votes in Congress, Bukele was able to strategically position loyal followers in the Court and the Attorney General’s Office. Now the entire state was under Bukele’s will. His control over the government was complete; he had successfully ousted Melara, who had been investigating him for months.
“Since Bukele came to power, the principles of democracy have been violated. It is a fact. That first of May there was a clear violation of the state of law. The Assembly was just being established and the first decision was to accommodate the state to his convenience,” Salvadoran activist Nicolás Noyola tells El American.
“After the inauguration of its magistrates and prosecutors, Bukele’s Assembly adopted measures contrary to the Constitution. Although our Constitution prohibits reelection, they modified it so that Bukele could be reelected,” adds Noyola.
And Nicolás Noyola adds that reelection in El Salvador appeals to a bitter memory. It is inevitable to relate reelection with dictatorship, since the last ruler to be reelected was the dictator Maximiliano Hernández Martínez.
With the state already molded to his convenience, it was time to take the next step. For Bukele, with the Attorney General’s Office and the Judiciary under his control, only one wing of society remained uncomfortable. The press, naturally a counter-power, remained firm, ready to expose the president’s authoritarian abuses and, above all, the pact with the mafias, even if the state uses all its power to hide it.
Silencing the press
“It has not been easy. Not at all. And here, between us, I confess: I voted for him; but I have to do my job,” a journalist from a well-known news media in El Salvador told El American anonymously. He is afraid that he will be arrested, or that he will be listed among the list of the disappeared. “That’s why I’m thinking of going into exile.”
He is in danger, like all journalists in El Salvador, in one way or another. Or rather, no one is in danger until they do their job. Because he only has to exercise his profession to become a threat. And this is typical, because the press became a target of the state after several reforms promoted by Nayib Bukele’s party.
With the Congress under their control, and the judges and prosecutors silenced, the deputies of Nuevas Ideas mounted their attack against the fourth power.
“The bench aligned with Bukele approved several reforms. And these reforms introduced a typification directly against journalists. This is called dictatorship,” Nicolás Noyola told El American.
On April 6 of this year, the 63 pro-government deputies voted on a reform proposed by both President Bukele and his Ministry of Security. The modification of the Prescripción de Maras y Pandillas Law allowed the government to punish any media outlet or journalist who reproduced messages “allusive to gangs.”
“The measure reaches anyone who publishes texts, images or any form of visual expression that alludes to gangs (…) [it punishes] with up to 15 years in prison those who elaborate or reproduce ‘messages, denominations or propaganda’,” reads La Voz de América.
Specifically, the law reads: “It is prohibited for the radio, television, written or digital media to reproduce and transmit to the general population messages or statements originating or presumably originating from criminal groups that could generate anxiety and panic in the population.”
Of course, what falls within these types of “messages” and what does not is at the discretion of the Government. This is a game changer for the press, and a direct attack on freedom of speech.
“I cannot stop writing about the pact with the mafias. And I will continue to do so, even if it is from exile,” the journalist on condition of anonymity told El American.
“The media are handcuffed because they can’t write about gang and gang violence. There is a lot of self-censorship, a lot of fear. Months ago it became public how the government negotiated with the gangs. The last wave of murders occurred because that pact was broken. That was revealed by El Faro, but no media that was not part of the investigation was able to report it. Before, it would have been on every front page in El Salvador. Not anymore,” said journalist Karla Arevalo.
“Freedom of the press is being limited. Such alarming censorship has never been seen before,” Arévalo stressed to El American.
But El Faro, despite the risks, continues. Gabriela Cáceres, who has been one of the main journalists denouncing the pacts, tells El American that inside the newsroom “there has been a very long discussion, but the answer is that we have decided to face the risks involved in continue working.” She remains in El Salvador.
Karla Arévalo told El American how Bukele has built his propaganda apparatus, thanks to public funding of various media, coercion and harassment. There are many state propaganda media, which only reproduce what comes out of the Presidential House.
“We independent journalists can no longer access official information or institutional channels. Institutional communications have been confined to the Presidential House,” said Arevalo.
According to Factum Magazine, more than 50 people have already been exiled from Nayib Bukele’s government. The report collects all kinds of testimonies, of people who had to flee El Salvador because of harassment and threats.
“I felt threatened. The deputy commissioner told me to get ready, because they were going to put me in jail,” Liduviana Escobar, former commissioner of the Instituto de Acceso a la Información Pública, told Factum.
Escobar had to seek asylum with her family. She left El Salvador after Bukele’s Congress dismantled the Constitutional Chamber of the Supreme Court. She was removed from her post for denouncing in an interview irregularities in the process of access to public information. There are more than 40 other people in a similar position.
And those who could not escape, suffered in their own flesh the outrages and persecution of Nayib Bukele.
“They fabricated a judicial process against me and I was detained,” says Congressman César Reyes. Reyes, on November 24, 2020, when he was director of the Junta de Vigilancia Electoral of San Salvador, was kidnapped by the state. According to the National Police, Reyes committed the crime of “expressions of violence against women”. Just before the arrest, Reyes had denounced attacks by activists of Bukele’s party.
The ARENA party denounced the kidnapping and its president, Erick Salguero, assured that it was an “illegal arrest.” “We want to express our disapproval of this,” he said at the time.
“Also there is the case of Ernesto Muyshondt, former mayor of San Salvador, imprisoned allegedly for corruption. But they have not respected the due process and today there are reports that he has been beaten, tied up and all his rights have been violated,” said Karla Arévalo.
Several of those consulted for this article agree that the Bukele government has imposed a policy of terror, protected by the state of emergency, which allows it to neutralize dissidence. Under the excuse of the fight against gangs, the government has detained almost 2% of the entire adult population of El Salvador, according to Amnesty International.
“Guarantees are limited. Meetings are prohibited. There have been unlimited detentions, without due process. Fundamental rights are violated. Even government officials who deviate from Bukele’s line have been persecuted,” said activist Noyola.
“We have discovered a giant case of espionage against dissidents. Journalists, academics, columnists, union leaders… I have also been spied on by the Israeli software Pegasus, which Bukele uses,” Noyola continues.
“Yes, there is political persecution. Due process is violated,” insists Arevalo.
The Bitcoin fraud
Many conservatives and libertarians around the world don’t care about all of the above or that Nayib Bukele maintains excellent relations with China, has asked the Cuban regime for medical cooperation or has fought with the United States — which has sanctioned several Bukele officials for their complicity with gangs. None of that matters, because Bukele is the man who is tough on social networks, speaks his truths to the hypocritical politicians of the world and, most importantly, pushes Bitcoin, which is the great totem of economic freedom and decentralized markets.
However, Bukele’s insistence on Bitcoin has turned out to be a disaster. El Salvador, a small Central American country with an extremely fragile economy, was forced to embrace a technological and monetary revolution for which it was never prepared. The result has been disappointing.
Not only the country’s bankruptcy is imminent due to the collapse of Bitcoin, which has been the national currency in El Salvador since last fall, but millions of dollars were spent adopting the cryptocurrency, only for it to become devalued within a matter of weeks. Further millions have been spent building an infrastructure that still today does not operate as expected.
In June 2021, Nayib Bukele promised Salvadorans that Bitcoin adoption would “digitize the economy, decrease dependence on the U.S. dollar, reduce remittance rates and boost investment.” Nothing has happened.
According to a survey by the Centro de Estudios Ciudadanos of the Francisco Gavidia University, 77.5% of Salvadorans reject the adoption of Bitcoin. Faced with the risks of volatility, 95% of respondents value the US dollar more than cryptocurrency.
A survey by the country’s Chamber of Commerce and Industry confirms that most entrepreneurs were concerned about the Bitcoin law. An extensive report by Rest of the World magazine exposes in detail “the cracks in the Salvadoran cryptocurrency revolution.” And, mainly, one of the fragilities is the digital wallet.
“It should be remembered that the Bitcoin monetary policy was approved in Congress without even prior debate. In 45 minutes in a plenary session and that’s it. How is it possible that a law of this size has not had any kind of debate or technical argument? It didn’t even go to a commission to be studied!” said César Reyes to El American.
On June 25, 2021, shortly after announcing the adoption of the cryptocurrency, Bukele said he would give away $30 to every Salvadoran who downloads and subscribes to the government-created digital wallet, the Chivo Wallet. “Just by downloading it and registering you will receive $30 equivalent in Bitcoin for your own use,” he said at a press conference from the Presidential House.
For these handouts, the Government made available $250 million. And, somehow, it worked: 56.6% of the population downloaded the Chivo Wallet. However, 55.1% did so for the $30 and, of all those who downloaded the digital wallet, less than 20% continued using it.
During the first four months of 2022, not a single new download of the app was recorded in all of El Salvador. A study by the U.S. National Bureau of Economic Research provides the data, which does not favor the cryptocurrency adoption law at all. Almost no one moves their money in Bitcoins today; and almost 80% of Salvadorans opened the digital wallet just for the $30 bonus. Even now, only 20% of the country’s businesses accept cryptocurrency (of these, only 11.4% have sold in Bitcoin.)
In short, the policy has been a failure. “But how is something like this going to be applied in a poor country, where there are still many people who do not have access to the internet?” Adriana Barrientos, a school teacher, and resident of the city of San Miguel in El Salvador, asks El American.
“I downloaded it for the $30,” says Barrientos. “But using the application is a headache.”
According to the Rest of the World magazine report, “some of those who have signed up have complained of technical problems with the Chivo application, such as accounts created with fake identities, lost transactions and error codes when trying to make a payment.”
“There have been several complaints of scams, impersonation, and privacy violations. The truth is that the wallet started with many errors,” says Karla Arévalo.
“Behind the Chivo Wallet there is a corruption scheme involving officials and Bukele’s family,” César Reyes contests.”It is easy to make the deduction, moreover. If this has no utility or positive economic impact; what is it created for?”
For Nicolás Noyola, Bukele’s adoption of Bitcoin has strategic purposes: “It is probably explained by the use of international transfers at no cost, perhaps he did it thinking of avoiding future sanctions from the United States.”
“Behind this system there is a lot of opacity and a private corporation was created that works with public funds. There is no further information about this mechanism. And in recent weeks, after the fall of Bitcoin at international level, they have avoided talking about this issue,” adds Noyola.
El Zonte was dubbed by Bukele as “the Bitcoin beach.” That night in November 2021, the sky above the beach was filled with fireworks. Wearing a white shirt, jeans and a baseball cap, Bukele announced the creation of the “Bitcoin City” to the euphoric cheering cryptocurrency followers. But the enthusiasm clashed with reality when the International Monetary Fund gave Bukele a slap on the wrist, when in January of this year it urged Bukele to eliminate Bitcoin as legal tender, given the risks that this implied for El Salvador. The president responded on his Twitter account with a Simpsons meme.
A couple of months after the slap on the wrist, El Salvador was positioned as the second country with the highest investment risk in Latin America, only behind Venezuela, according to the Emerging Markets Bonds indicator carried out by JP Morgan. In one year, it surpassed Argentina.
According to an analysis by Bloomberg Economics, El Salvador is one of the five countries in the world at the highest risk of default. In the list, El Salvador is the only Latin American country and is followed by Turkey and Egypt at the top of the list of emerging markets at risk of debt default.
In addition, the rating agency Moody’s downgraded El Salvador’s credit rating and “issued a warning to investors: potential losses would exceed those usually suffered by other debtors in similar credit situations,” according to Bloomberg in an article published on May 4.
“The possibility of a ‘credit event’ in El Salvador is highly serious, whether it is a default, restructuring or debt swap.”
According to Moody’s, everything is a result of the financial imprudence of Nayib Bukele’s government. It is a series of problems, generated by Bukele’s policies, that are looming as a default looms. There is no “credible financing plan,” according to the agency.
In the end, the notion of stability and efficiency that Nayib Bukele has built thanks to his astute management of social networks is nothing more than a fiction, which clashes with the reality of a country in crisis. You Shook Me All Night Long by AC/DC, blaring at full volume, stuns. The fireworks are blinding; but when the music stops and the gunpowder falls, El Salvador is exposed: a country in economic crisis, beset by gangs and a government that has declared war on the press and dissent.
“The reality is different. Bukele is like Coca-Cola. His publicity is good, but you know it’s actually harmful to your health,” Nicolas Noyola told El American.
Orlando Avendaño is the co-editor-in-chief of El American. He is a Venezuelan journalist and has studies in the History of Venezuela. He is the author of the book Days of submission // Orlando Avendaño es el co-editor en Jefe de El American. Es periodista venezolano y cuenta con estudios en Historia de Venezuela. Es autor del libro Días de sumisión.