Geopolitics

What Cartes Thinks - The Blunt-Talking Billionaire Set To Be Paraguay's Next President

Horacio Cartes won a comfortable victory in last weekend's election, putting the long-ruling Colorado Party back in power. But this time it may be a new brand of personality politics.

New Paraguayan President Horacio Cartes
New Paraguayan President Horacio Cartes

ASUNCION – Horacio Cartes’ foray into politics was controversial and dizzying at the same time. In just three years, the 56-year-old billionaire businessman went from running a soccer club to being the Presidential candidate for the Colorado Party, the most traditional and powerful party in Paraguay. Now he's set to be the nation's next President.

In order to achieve this, he invested $20 million in his campaign, a figure that represents only a tiny drop of his huge empire.

He always has a serious expression on his face and his social concepts are often rigidly conservative. When a TV program asked him about his stance on same-sex marriage, and said he was against. The interviewer then asked him what he would do if his son told him that he wanted to marry another man. The response was brutal. “I would shoot myself in the balls,” he said, without hesitation.

Cartes speaks his mind. This kind of attitude is what led him away from the progressive sectors of society, while earning him the votes of the social circles that remain rooted in national conservatism. He gained even more fans with his image as a successful businessman who knows how to organize things and give orders.

What he could never shake, however were the rumors that he had conducted shady dealings – such as drug trafficking – that he eluded with a well-oiled legal contingency plan.

Cartes comes from a wealthy family. From his father, who owned the Paraguayan franchise for Cessna aircrafts, he inherited a passion for business. When he finished high school, Cartes went to the U.S. to study aeronautical engineering. At 19, he came back to his country and started a currency exchange business, which quickly grew into the Banco Amambay bank. This was the first pillar of an empire that today counts 25 companies.

Teflon Horacio

His first setback came in the mid 1980s, during the dictatorship of President Alfredo Stroessner (1954-1989). He was accused of buying dollars at a preferential rate, which he would then put on the black market. Charges were brought against him, and he went into hiding for four years. When he came back, the case had disappeared.

In the past decade he was investigated in Brazil allegedly smuggling cigarettes into the country. He was never charged, he says proudly. In 2011, a WikiLeaks cable revealed that the DEA had investigated him for alleged ties to drug traffickers. None of this could be proven conclusively.

Before entering politics four years ago, Cartes began as a sports manager. In 2001 he became president of the Club Libertad soccer club, where he led a strong investment campaign. This move garnered him a lot of praise, which would prove determining in his decision to launch into the political competition.

He entered the Colorado Party using his best assets – decisiveness and money. He joined in 2009, a complete novice in the world of politics. Party statutes stated that to be a presidential candidate, he should have been a member of the party for at least ten years. He organized a convention to change the statutes, reducing the requirement to a year. The groundwork was laid.

His arrival in the Colorado Party was met with some resistance, especially from historical leaders. “With Horacio Cartes will start the era of obscenity, of political pornography, and all vices will become explicit.” These harsh words are from former President Nicanor Duarte Frutos, who a few months later changed his mind and joined Cartes.

The incoming Paraguayan president has two daughters and a son, products of a long marriage that ended in separation. His sister Sarah now manages his economic empire, allowing the entrepreneur to fully dedicate himself to politics. Skillful, entreprising and bold, Cartes said: “I did not join the party to become rich, I already have everything.”

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ